Hello, and welcome to Hyuto Capital Markets Day 2020. We're very glad that you could join us here today. My name is Lina Hoggetra, and I am the Head of Investor Relations at Hyuto. We will first start with a company update by our CEO, Hilde Moretto Osheim, where we will provide an update on the targets and ambitions launched at the Investor Day last year. We would also take a closer look at growth areas included including extruded solutions, recycling, renewables and batteries.
We will then have a break before continuing with the financial priorities update from our CFO, Paul Schildemont. This presentation begins at 10:40. Following the presentation, we hope you will also join us for a Q and A at 11:30. In order to ask questions on the Q and A, you will need to join the conference call via the link or dial in information. If you only would like to listen in, then you can remain on this video link.
And now over to you, Ille Merete Rolsheim.
Thank you, Aline, and welcome from me as well. We would have preferred to welcome you in person as we have done in previous years. However, 2020 has been an exceptional year in many ways. That said, we hope that you will join us remotely for the next few hours from your office or home office as we lay out Hydro's strategic agenda towards 2020 5. Before we dive into the strategy, I would like to start with the progress we have made during the past year and how we have delivered on the agenda that we launched on our Investor Day last year.
When I took over as CEO in May of 2019, we launched an ambitious improvement program of SEK 7,300,000,000 to be delivered by 2023. This is progressing well, but when COVID hit us, we increased focus on improvements within our own control. On several of these cost elements, we have over delivered. Last year, we also announced a strategic review of Rolled Products. The COVID situation has impacted the timeline of the process, but we are now progressing and we are evaluating alternative ownership structure for the business.
We hope to revert with our conclusion in not too distant future. Our new capital allocation framework has been implemented this year and quickly turned from theory to practice as this has helped us to steer us through the challenges of COVID-nineteen. As you saw in the Q3, this has helped us both to preserve and generate cash flow in a tough market. That said, our 10% Russia target has been challenging to reach in these markets. We believe the strategy we present today will increase the possibility that we achieve the 10% target over the cycle.
And with the market tailwind we have seen lately, current spot prices and our planned improvements indicate a return of the company about 10%. Finally, when it comes to sustainability, our goal of reducing CO2 emissions by 30% in 2,030 remains on track and is supported by key projects like our fuel switch project at Alunorte. Now let's take a deeper dive into the status of these initiatives, starting with our improvement program. When COVID-nineteen hit us in the start of 2020, we had to refocus our improvement program toward controllable measures like operational improvements, cost reductions and bringing Alunorte back to full production. Our business areas redefined their improvement targets and shifted focus to levers we can control since market driven goals were no longer attainable.
I am pleased to share that we will achieve the 2020 improvement target of NOK 4,100,000,000 on current run rates despite a commercially challenging environment. This is a tribute to the cost discipline of our business areas, which has managed to focus on operational excellence, fixed cost reductions, procurement initiatives in all business areas as well as restructuring initiatives in the downstream areas in the midst of the COVID turmoil. As you saw on the previous page, over half of the 2020 improvement target comes from our B and A business in Brazil, the main effect coming from Alunortes ramping up to full capacity compared to the 50% capacity utilization during the embargo situation in 2018 2019. Increased robustness of our operations in Brazil has been one of our main priorities. Over the past year, Boxita Alumina has increased its robustness by both strengthening its existing operations and creating closer ties with local communities.
Investments have been made to increase the capacity in our water treatment system, creating increased robustness during heavy rainfall. Operationally, we have strengthened the maintenance plans to ensure integrity of our key equipment and pipeline. This will continue into 2021. We expect Alunorte to operate at nameplate capacity in 2021. The new press filter technology is now in full operation and is working well.
This will reduce the footprint of our deposits from the refinery with 40% going forward compared to previous technology. Strengthening community relationship continues to be a top priority in Brazil. Considerable effort has been put into this and we have a constructive dialogue with local communities and other key stakeholders on a regular basis. COVID has given us the opportunity to demonstrate that we can be a good neighbor in the local communities. During COVID, we have donated food baskets, water, masks and critical supplies for hospital use as well as educating the local people on best practices to stay healthy in order to avoid the spread of the virus.
In addition, as part of our sustainability targets, we have worked with 16,000 individuals across 7 municipalities in our neighborhood to support their education and skill development. Now let's move to another key lever on our improvement agenda, Rolled Products. In Rolled Products, we set out an ambitious restructuring and cost saving agenda last year. And I'm pleased to say that we have not only delivered, but exceeded the cost improvement goals for 2020. The cost improvement expected to be realized for 2020 are well above the original target.
All three initiatives, organizational rightsizing, procurement and metal cost optimization, are either ahead of plan or on track. It is important to note, however, that with approximately 11% lower sales in 2020 compared to 2019, the commercial losses are more than offsetting the SEK 500,000,000 saving. I would also like to highlight the great work Rolled Products has done to optimize net operating capital by reducing inventories. Here, we are ahead of target. We have reduced inventories by SEK 1,100,000,000 with even further reductions planned for 2021.
In sum, this means that Rolled Products is on its way to deliver on the cost improvements 2 years ahead of our original plan. Cash discipline has been a major focus area in this unprecedented COVID situation. We have delivered considerable effects from the improvement program throughout 2020, which has also contributed to significant cash preservation. Net operating capital has been reduced by NOK6 400,000,000 since year end 2018, although in Q4, we could see a reversal of some of this effect. Our focus continues to be strong on inventory management.
Early this year, we decided to freeze 25% CapEx to safeguard liquidity. In doing so, we managed to preserve SEK2.5 billion to SEK3 billion in both sustaining and growth CapEx, more than originally planned. With that summary in mind, let's change gears towards our sustainability ambitions announced last year. Sustainability is the basis for our future positioning. Sustainability is both our license to operate, while at the same time, it is an opportunity for us to differentiate representing market and business opportunities.
We have decided to prioritize 3 areas of sustainability: social responsibility, environment and climate. I have already mentioned some of our main social initiatives in Brazil over the past year that support our target of educating and developing the skills of 500,000 people by 2,030. This overall 500,000 target is on track. Early this year, we also entered a partnership with UNICEF to help us to educate and develop skills for children and young people in support of our overall goal of 500,000. Now I would like to give status on the 2 other areas of sustainability, environment and climate.
With respect to environment, we have had special focus in Brazil during the last year. Here, several initiatives are well underway and some have just kicked off in 2020. This year, we have rolled out a pioneer project to reduce our environmental footprint from the mining operations, which will eliminate the need for new tailings storage facilities at Pergobinas. The tailings dry backfill technology allows inner tailings from bauxite mining to be returned to the already opened and mined areas instead of being deposited in separate permanent storage areas. These initiatives aligns very well with the new global tailing standard recently announced by the International Council of Metal and Mining, which seeks to raise the benchmark for safe and sustainable management of tailings.
This technique has the potential to save Hydro substantial amounts when balancing the CapEx reduction with additional OpEx. Last year, we targeted a one to 1 rehabilitation of available mined out areas within 2 years after the initial mining. And we have managed to deliver this in 2020, rehabilitating close to 200 hectares of mined out areas using native species from the Pergomenas region. Finally, our goal of reusing 10% of bauxite residue is progressing well. Earlier this year, we launched a potential exciting application, reusing Alunorte's bauxite residue as a soil conditioner in local agriculture.
Now let's move to climate where again Brazil is in focus. Last year, we announced our CO2 reduction targets, 10% reduction by 2025, 30% by 2,030 and towards 0 by 2,050. A greener energy mix at Alunorte is a key enabler of these goals. One of the main driver for the reduction is switching from heavy fuel oil on our calciners to liquid natural gas at Alunorte. We continue to mature this project inside the fence and we are on track given that we have a solid gas supply and a terminal solution.
In addition, we are currently also working on a project in Alunorte to install 3 L boilers. The first one is a pilot is planned in operation in 2021. If successful, we will install 2 more L boilers. These 3 L boilers will have the potential to reduce an additional 400,000 tonnes in annual CO2 emissions. This project was not part of the initial scope of our 10% target by 2025 and if successful, could help us to surpass the 10% goal.
Given available renewable energy in the region, our next step will be to electrify our coal boilers. This will reduce our CO2 emission by another 2,000,000 ton per year by 2,030 and is the most important enabler for our 30% target by 2,030. Our energy division is working on development projects that can supply renewable energy at competitive rates to enable the electrification. This year, we have signed 2 MOUs that could secure solar and wind energy at attractive cost to Alunorte. Regarding the 2,050 target of reaching 0 carbon from our processes, we are working on different paths.
One interesting path is that we are partnering with several academic environments to explore technology to be able to capture our CO2 from our smelter processes. Captured CO2 might be stored or utilized, for example, chemicals and efuels. Another path we are looking into is replacing fossil carbon by biocarbon. This is challenging, but we are part of 2 fundamental R and D programs supported by the Research Council in Norway. Finally, we are working on the chloride facility project supported by Gas Nova, where we explore a new process of producing aluminum based on aluminum chloride with 0 CO2 emissions.
Now I would like to round off this sustainability recap with an area that ties together both profitability and sustainability, our green products portfolio. We have seen great traction in the market for our low carbon products Hydro Ruduxa and HydroCircale since launching these products in 2019. Customers care more and more about the processes behind the materials they purchase and the impact these materials have on the environment. And we are also pleased to see that these customers are willing to pay a premium or commit larger volumes for these low carbon products. We expect our sales for Hydrolyduxa and Hydrolyduxircal to double and triple, respectively, from 2020 to 2021.
We are positioning our recycling portfolio to meet this increasing silcal demand over the medium term through key capacity investments. Some of the capacity expansion is already planned and some will be staged to ensure the market demand support the investments. With that reference toward the future in mind, let's now look ahead to 2025 and how we want to position Hydro going forward. In the second half of the presentation, several colleagues will assist me in introducing you to Hydro's 2025 strategy. Before getting into the details, I would like to briefly set the context for our strategic positioning by going through the macro and market outlook for our products.
2020 is officially a year of recession. CRU estimates, for example, that Europe's GDP will not return to 2019 levels before 2023, with the U. S. Returning in 2022. Still, the global economy is already expected to rebound somewhat in 2021.
The ongoing recovery in China will actually record 2% GDP growth in 2020. And combined with the COVID-nineteen vaccine prospects, this improves the outlook for aluminum. Strong demand has been the main driver behind the higher chifu and LME price lately, and we see demand improving across most end use categories, like in some of our key markets, automotive and building and construction, continuing the recovery observed in the second half of twenty twenty. Let's now see what this means for our downstream businesses. The recovery seen in enrolled and excluded coincides with the GDP recovery with a strong uptick in 2021 followed by a return to more normalized annual growth rates.
In rolled, we have seen the recovery in automotive and can generally leading the rising demands expected across all segments. In extruded, we also see a pattern where rising GDP and industrial production stimulates demand for extruded products in segments like building and construction and automotive. These patterns of recovery are a strong sign for Hydro's downstream businesses as we are well positioned in automotive, can and building and construction. Now let's move upstream to the outlook on global balance. In Primary Metal, upstream demand expectations are improving.
However, oversupply is expected to remain in 2021 2022 in China and also world ex China according to CRU. It is important to note that the expected surplus has been significantly reduced since the beginning of the crisis, in line with better than expected economic recovery in Europe, in the U. S. And especially in China. In 2020, Chinese primary demand has recovered strongly, fueled by fiscal stimulus and led to China being a net importer of primary aluminum for the first time in many years, absorbing some surplus from world ex China.
This coupled with attractive cash and carry deals due to Vicontango's low financing costs and the underlying recovery in demand elsewhere, have supported aluminum prices. The outlook for next year to be more balanced if we experience an even stronger demand recovery in the rest of the world already next year or if less capacity comes back to the market than expected. And we do observe other industry analysts expecting a lower oversupply in 2021. The global alumina market is expected to remain balanced with excess production in the world ex China with offset by Chinese alumina imports. New alumina capacity in India, Indonesia and Southern China is coming on stream over the medium term, meeting additional demand from smelter production growth in China, Malaysia, India and Russia as well as restarts in other parts of the world.
As long as the ex China market remains long, PAX will be set by the marginal production costs in China. Higher raw material prices could drive prices, but these are currently at multiyear lows. More fundamentally, the market could tighten by either foreign exchange gains of the RMB over U. S. Dollar, making imports cheaper than domestic production or through higher than expected aluminum production.
Political ambitions such as the European Green Deal with a goal of reducing CO2 emissions by 55% by 2,030 are catalyzing the energy market restructuring. Technology and cost efficiency improvements are also facilitating this shift. On the left hand side, you see the rising demand for renewable energy like solar and wind. But also on the right hand axis of this chart, the expected rising cost per tonne of direct CO2 emission according to IHS. On the right hand side, we're also seeing how the electrification of transport, driven also by governmental decarbonization initiatives, is driving battery demand in Europe.
In response, governments are pushing framework conditions that financially enable the development of regional battery industries. We are increasingly exposed to political and regulatory trends. In Europe, the European Green Deal will address all energy, climate and environmental legislation in a holistic framework. Here, the EU is lifting its climate ambitions and has proposed to increase the 2,030 target for emissions reduction to at least 55% and to become climate neutral by 2,050. In this, it's encouraging to see that EU has defined aluminum as a critical raw material for the green transition in Europe.
This should create market opportunities for our low carbon aluminum. It is encouraging to see the interest in EU decision making in utilizing aluminum as a building block in the green future. In terms of carbon leakage, the EU has proposed conditions which would allow for indirect CO2 compensation to continue.
At the
same time, the green deal ambitions are expected to further tighten the EU ETS increasing carbon prices. Here, there are still many details to be finalized in the coming year. In terms of trade tensions, we have seen a shift from globalism towards protectionism and with increased focus on regional and national priorities. The U. S.-China trade war and Brexit are clear examples on this trend.
COVID-nineteen has accelerated the development with political and regulatory measures aiming at reducing import dependency and supporting local industry value chains. To us, this brings both risks and opportunities. For example, aluminum imports from China to Europe has doubled in volume from 2012 to 2019. For Hydro, this is a concern as China has an overcapacity and contributes to depressed prices. Therefore, I'm pleased to see that the EU has implemented measures to protect the European market from unfair competition.
This includes implementation of anti dumping duties on extruded products from China and opening up anti dumping investigations into import of lateral products and foil from China. It is expected that these measures will have positive effects both on price and volume. In sum, we are increasingly exposed to political and regulatory trends. We need to live with this volatility and it's important that we are agile and active to ensure that we protect our position in our key regions. Continuing on the topic of trends, I would like to deep dive into some global megatrends that also impact our business.
The global megatrends will shape demand and consumer behavior in the years to come, and we see that some of these key trends are in our favor. In terms of sustainability, general consumer sentiment has placed greater emphasis on climate abatement, a push towards more for less and the need to reduce waste and increase recycling. If the world is to reach its climate goals, we need to go through an energy transition towards more renewable energy sources. The energy transition that will need to take place will pave the way for more renewable energy, more hydro, solar and wind power, areas where we have the competence and a track record to build on. Solar and wind are the fastest growing alternatives to carbon intensive and nuclear energy.
Today, they account for 7% of global generation, twice the share in 2013. Further, electrification of the transport sector is a driver for aluminum demands. Emobility means that more transport will be electric, increasing the need for lightweight aluminum frames and batteries. Demand for aluminum in the vehicle sector is expected to grow by 6,200,000 tonnes by 2,030 at a 5.2 annual growth rate. Electrical vehicles account for 5,000,000 tons of this additional demand.
Rising industrialization and urbanization globally is also expected to escalate the demand for aluminum products. When more and more people move into cities, that will boost the need for smart and energy efficient housing and infrastructure, both driving demand for aluminum. Overall, we see that several of the key trends are very much in our favor and support demand for aluminum. Over the next 10 years, we expect the demand for primary aluminum to increase by 2% annually or 16,000,000 tonnes between 20,202,030. In semis, we expect a 3% annual growth rate and a total volume uplift of 32,000,000 tons over the same period.
Now that I have mentioned different trends which are relevant for Hydro, I would like to quickly explain why we are well positioned to extract value from these trends. So what does Hydro have that fits these megatrends? What are the capabilities that we hold as a company and that sets us apart from the rest? First of all, we have a strong foundation to build on. We have expertise and competence built up during 115 years of developing sustainable businesses.
Today, we have more than 35,000 competent engaged colleagues throughout the world and in the aluminum value chain. In many areas, we stand out as number 1 in our industry based on our leading technology and know how. We develop creative, innovative and sustainable solutions in close collaborations with customers. Our marketing and sales teams work closely with our customers, developing new alloys for new applications, and we are well positioned in attractive segments like automotive, building and construction and cans. Our innovation and sustainability agenda are interlinked to our commercial agenda.
And in many instances, we are our customers' chosen partner for this reason. In sustainability, we are among the producers that have the lowest carbon footprint in our industry. We have years of experience in Hydro power production and recycling that we can scale and leverage in the years to come. In summary, Hydro has the skills and capabilities to match these megatrends, and this has been an important input to our strategic direction toward 2025, sizing these opportunities. In summary, Hydro has the skills and capabilities to match these megatrends and this has been an important input to our strategic direction towards 2025, sizing these opportunities.
So based on our competitive advantages and the trends that we are seeing in the world around us, our strategic direction towards 2025 rests on 2 pillars. The first pillar is to continue to strengthen our position in low carbon aluminum. The second pillar is to diversify and grow in recycling and new energy. When it comes to the first pillar, we should build on our strengths, but continue to strengthen our position when it comes to cost competitiveness and a competitive asset base, continued strong market position, capitalizing on innovation as well as continue to differentiate on sustainable footprint in our processes and products. We have also been looking beyond aluminum to see how we can diversify our portfolio where our capabilities match the megatrends, and this pillar is number 2.
Currently, our most interesting growth prospects are within recycling, renewable energy and batteries. Recycling is a promising area area where we already have great capabilities and a big portfolio of remelters and recyclers. Improving and expanding in recycling represented a great opportunity for us, much supported by a strong recycling trend among customers, regulators and end consumer worldwide. It promotes and defend aluminum in a circular economy. In renewable energy, we want to build on our competence, portfolio and more than 100 years of renewable energy development to become an international renewable energy developer and increase our captive production in wind and solar in partnership with others.
Finally, batteries. The battery sector is growing at a tremendous speed along with a fast emerging megatrend, the energy transition, which will require an unprecedented need for energy storage. With our competencies in materials, electrochemistry, energy and industrialization, our foundation provides unique opportunity to develop a profitable business in this area and we've already taken some key investments along the battery value chain in recent years. But how will we execute on these two pillars? When it comes to strengthening our position in low carbon aluminum, several focus areas will get us there.
1st, we need to continue to sustain and improve the cost competitiveness of our asset base and continue to focus on operational excellence and costs through our improvement programs. Secondly, we will continue to position aluminum towards new applications and develop new products to fit for future and using our unique competence base and close partnership with customers and secure an even bigger share of the market. Finally, we will continue differentiating based on our low carbon products. In the next slides, I will talk about the additional improvement initiatives that have been identified to strengthen our position in low carbon aluminum. First, an extended cost improvement program, but also ambitions in the terms of positioning in the market.
Last year, we launched an improvement program toward 2023 of SEK 7,300,000,000 in EBIT. With this year's strong progress and our overall horizon towards 2020 in mind, we have reassessed our original ambition and extended it by 2 years. I'm therefore pleased to introduce you to an extended, even more ambitious improvement target of SEK 8,500,000,000 in cost savings to be delivered by 2025. Similar to the previous program, 2018 remains the baseline and the saving achieved in 20 nineteen and 2020 are included in the SEK 8,500,000,000 target. The program consists of many different cost improvements initiatives within the business areas, spanning from continued fixed cost improvements to procurement, to creep, to efficiency, to consumption factors.
This program remains front loaded with 70% to be realized by the end of 2021 and the main levers continue to be the SEK 2,700,000,000 from curtailment reversals in Brazil. The remaining contributions are to be delivered across VAs with the improvement levers mentioned above. However, given the recovering market outlook, we also see commercial potentials toward 2025. I will now introduce you to our market driven commercial ambitions. Given the megatrends we discussed before, our low carbon aluminum positions us well to gain market share and increase margins in the years to come.
However, to achieve this, we need to deliver innovative solutions and build on our strong track record of collaborating and partnerships with our customers. We need to continue to position aluminum toward new applications and develop new products to fit future needs. Rolled Products, Primary Metal and Extruded Solutions have identified an additional NOK 2,000,000,000 in commercial uplift through 2025. These commercial ambitions come in addition to the SEK 8,500,000,000 in cost improvements and are based on market and customer driven growth opportunities like I mentioned above. It is important to note that these ambitions are market dependent and a situation like the year 2020 could negatively impact the realization of these goals.
Now let's take a closer look at the different business areas to explore their specific strategy and ambition in strengthening our position in low carbon aluminum. Let's start with B and A. According to the CRU's cost curve, Alunorte is currently performing in the 1st quartile position. This is due to high quality bauxite scale and efficient processes. For bauxite and alumina, it's key to have stable and robust operations.
The EBITDA improvement target of SEK 3,000,000,000 is very much dependent on being able to operate at full capacity. This will also be the key enabler to sustain our 1st quartile cost position. The Alunorte full switch projects will support our cost position by improved energy efficiency. To meet our CO2 target of reducing CO2 with 1,000,000 tonnes by 2025, deliver on the 1 to 1 rehabilitation target of the mined out areas in Paragominas as well as using the new dry backfill technology to avoid future tailing dams will all be important to support sustainable refining and mining in Brazil as well as supporting our strategy of strengthening our low carbon aluminum position. Let's take a look at Primary Metal.
Primary Metals' relative EBITDA compares well to our industry peers and has been supported by our improvement program, but also favorable U. S. Dollar the currency rate U. S. Dollar to Norwegian kroner and VAREL to Norwegian kroner development.
Also in Primary Metal, the improvement program contains the reversal of the effects of Alunorte curtailment, which is bringing Albras back to full production after partial curtailment in 2018. Moving forward, the ramp up of Husnes Line B, which began last month, is an important driver of the NOK 3,000,000,000 improvement program in Primary. In addition, improvements in operational parameters, including consumption factors, CREEP as well as continued fixed cost reduction, support this goal. Primary Metal also have a commercial ambition of SEK 300,000,000 by our value added and greener product portfolio. Now I would like to invite Erik Vossen, Acting Executive Vice President of Extruded Solutions, to take you through how his team is strengthening Hydro's position in low carbon aluminum.
Eirik, the floor is yours.
Thank you, Hilde. I will talk about how Exclude Solutions have delivered growth in both our margin and cash flow since the start of the joint venture in 2013. Since the start of the joint venture, we have realized synergies both in our plant structure through restructuring activities and improvement have also happened in combination with growth in the extrusion market since 2014. Starting first looking at the development in our EBITDA and EBITDA margin. We here see strong development since 2014, although it's tapering off since 2018, 2019 2020 for obvious reasons.
Let me first talk a little bit about 2019. As you all know, in 2019, we had this cyber attack in Hydro. This proved very challenging for Excluded Solutions in the Q2 of that year especially. But since then, we have received insurance compensation amounting to a total of NOK 200,000,000 in 2019. And in 2020, we have received an additional NOK 500,000,000 in compensation.
In addition to that, we have also received the government grants of approximately NOK 200,000,000 for plants in countries hard hit by the COVID pandemic. Also looking at the cash flow, we also here see a strong development since 2016. But in 2019 2018, sorry, we had a negative observation and this requires some explanation. What happened in 2019 was that we had the Alunorte alumina situation in Hydro in combination with the Section 232 in North America and also the Rusal embargo. And this put a question mark on our supply chain of metal into our extrusion plants.
On the back of this, we decided to do additional sourcing of aluminum to secure supplies to our customers. Later on, this has been released through the reduction of net operating capital in 2019, and this is also the basis why we are seeing strong cash flow figures in 2019 2020. What we also see in 2020 is that we had a weak second quarter, but a very strong Q3. The strong Q3 can be a large extent to a large extent be explained by supply chain factors. But having said that, we also see that business looks to be picking back up to normality again.
And without giving any strong guidance to 4th quarter, are seeing our order book normalizing. Moving then on to our restructuring efforts in the past years, which significantly have strengthened our cost position. In 2019 2020, we have closed a total of 10 plants and divested 4 plants. So the total demanding been done is approximately 1300 people or 6% of workforce, and this comes in addition to the divestments. We have made strong improvements through our ES 5.0 program, saving on SG and A costs.
And we also have a dedicated procurement saving program that is yielding very good results. Looking then at the development of a direct contribution per kilo underlying EBIT per kilo from 2017 and onwards. And we here see a good development and a good story. This is also happening with a fairly flat volume development from 2017 into 2018 and a reduction in 2019 also due to the cyber attack. And of course, the volume development in 2020 due to the unprecedented COVID situation.
What I'm happy to say is that Q2 this year, which was particularly challenging, in Exclude Solutions, we managed to do significant cost reductions, really beating our expectations. And this has been one important factor for the good results that we also delivered. So the questions you will have is also will this stick with us going forward when the market is coming back. What we currently are observing is that approximately 70% of this cost saving is sticking, and this is proving to be a good foundation for further improvement in Extruded Solutions. Moving then to the market and the market position of Extruded Solutions.
We are by far the largest extrusion provider globally, with more than double the size of the 2nd competitor in the market being Xinfa Aluminum. What is important for Extruded Solutions is to really leverage our size and deliver additional value to our large global customers. Looking at the business units. We have 4 distinct business units in Extruded Solutions, all with very strong market presence. Our total volume sold in 2019 of just below 1,300,000 tonnes, we see that we have very distinct market segments being Europe with 40%, North America being 43% of our sales and then Precision Tubing being highly specialized in the Precision Tubing market and being the market leader globally and Building Systems with 6%, which have a global business where the but where the most of the volume is coming in Europe.
Looking at the different sectors that we are in. First, let me talk about the automotive and transportation sector, where we have 17% 22%, respectively. This totaled 38% of our portfolio. If you look at the industry average according to CRU numbers, the footprint in this market of industry is 28%, meaning that we have a significantly larger market presence in the automotive and the transportation sector. Moving then to building construction.
And our footprint in terms of our portfolio allocated to these segments is 31%. This is measured against a CRU average for Europe and North America of 43%. So we are smaller in building construction, which is more general execution and where the focus on being cost efficient and where the competition on price is somewhat stronger. This must not be confused with building systems because building systems is 1 step further down the value chain and delivering the finished facades, doors and windows to the customers. We are also strong within industrial and HVAC and R segment, which accounts for 18% of our portfolio and also the distribution segment, where we are particularly strong in North America and where total footprint is 12% of our portfolio.
Then to talk a little bit about the segments that we are leading in. And first, starting with the automotive segment. You all know very well the story that the automotive sector is trending towards lighter cars and more environmentally friendly solutions. We have found that our size enable us to have superior R and D activities and also enable us to deliver superior services in terms of modeling and simulation that our customers take really good advantage from. This has provided us with attractive margins from developing unique solutions in partnerships with our customers.
We have a strong and well developed supply chain and a global footprint. We have a unique product offering and we have very close customer relationships. The annual sales within this sector is about 200,000 tons in 2019 volumes and again 17% of our sales. Then talking a little bit about the strategic positioning we are having within the regions and starting with Extrusion North America. What's important to understand is that in North America, we have strong positions on several ends of the markets.
We have a very strong position on the high runners in the market being the pickup trucks. Here we have unique technology called the hydro farming technology, enabling us to deliver support structures to the cabins for the pickup trucks sold in U. S. This is a very strong position for us. At the other end of the scale, we have a strong position within e mobility.
And e mobility is growing fast all around the world. The predictions for sales of electric vehicles in 2020 is 2,000,000 units, increasing to 3,000,000 units in 2021. Of course, much of this is happening in China, about 50% of the sales figures. But we also see a strong development both in Europe and in North America. In terms of our support to these segments, the improvements we have done through investments in the high performance presses both in Creosona and Pfenex enable us to deliver superior products to our customers.
And we have a very targeted approach by growing by focusing on the mobility, body and light, structural elements and also the ABS braking segments. As for Extrusion Europe, we have invested in fabrication activity and have enabled us to get a very strong position within e mobility. We are focusing strongly on cross plant collaboration through our so called automotive platform, where we streamline deliveries and put several plants together to deliver concepts to our customers. As for Precision Tubing, we have a very exciting development. We recently launched our high voltage cables for e mobility sector, and we have closed contracts with several OEMs.
This is not a normal aluminum cable, but it's an aluminum cable in a high strength alloy, enabling the OEM to shape it to fit exactly into the car and be mounted by robots. Historically, the OEMs have been using copper solutions for this. The copper solutions are not rigid and they're quite large and bulky. So by using our aluminum solution, the OEMs are both saving costs and saving weight and increasing efficiency. In precision tubing, we have also launched several products lately using our material science competence for both automotive and e mobility sectors.
Moving then to more traditional market segments. And then I will talk about the commercial transport sector and also Hydro Building Systems, starting first with the commercial transport sector. In Extruded Solutions, we are the market leader in delivering Extruded Solutions to commercial transport segment in North America. This is a very strong position that they have built over years, basically leveraging on our size being the only company that are able to deliver solutions across the American continent. The total sales for Extruded Solutions in 2019 were 265,000 tonnes.
This, of course, have been declining in 2020, but we are seeing clearly an improved order book into 2021. Our strategic focus is to improve market share and grow the trailer segment content through innovative applications and downstream service content. Then moving to another segment that we are extremely proud of, and that is Hydro Building Systems' pioneering introduction of sustainable building materials into the building construction sector starting in Europe. Hydro Building Systems have a dedicated unit serving customers globally, collaborating closely with building developers and architects. Since January 2020, all building system premium ranges manufactured in Europe are made of either HydroCircale or Hydro reduxa, being the Hydro in house brand with very low carbon footprints.
In 2020, Hydro Building System is aiming at selling 17,500 tons of hydrosilkal in Europe. This might not sound that much. But if we look at the saving in CO2 emissions from the 17,500 tons, the figure is quite significant. If you take the delta between the average European emission for aluminum produced in Europe and the emission coming from the Sildosir Karl brand and multiply that with 17,500 tons, we get a total saving of 110,000 tons of CO2. This is not insignificant.
In addition to this, in addition to pioneering sustainability within the building construction sector, Hydro Building System is also having good traction in the market with the so called eco design. This is proving very effective. Moving then to the improvement that we are looking to deliver going forward. This we are looking to do through increased productivity, plant specialization and a greener product offering. In terms of our improvement targets on cost towards 2025, we are looking for a total to deliver a total accumulated saving of NOK1.3 billion in terms of EBITDA improvements.
This is coming from the SG and A reductions, portfolio restructuring and procurement improvements. In terms of commercial ambition, we are looking to deliver a total of NOK1.2 billion in EBIT improvements for margin expansion in new products. We see that our technical capabilities are enabling us to charge higher margins and expand our margins for new products that we are delivering to customers. So we are on a very strong path to deliver this ambition. But going forward, we will continue our restructuring.
We'll continue to focus on closure and divestment of smaller plants with unsatisfactory returns or plants who do not fit to have a strategic fit in the portfolio.
We are
looking to enhance our production platforms in attractive segments like automotive in Europe and North America and a specialization in building systems. In terms of our business system, we will increase focus on productivity and continuous improvement. We have a strong ambition to beat inflation going forward. Another very important topic for us is recycling. We have a very strong recycling platform in Extruded Solutions, both in Europe and in North America.
The recycling in Extruded Solutions is basically built in to have short supply chains from supplying billets into the extrusion plants. But here, we have a unique opportunity to forward focus more on using more post consumer scrap and hence increase our competitive position focusing on marketing green products going forward. We really want to capture the rising demand for low carbon aluminum, and we think we have a very good position to do so, both using the Hydro in house brands, being HydroSilkal and Hydro Reduxa and also increase the recycling of post consumer scrap within our recycling system. So I hope you have had a good understanding of the strategic development that we are having in Extruded Solutions. I think we have we are seeing strong developments in terms of our strategic positioning going forward.
And I really believe that we will be able to deliver on our ambitious targets towards 2025. And by that, I will conclude and hand the word back over to Hilde to talk about our strategic pillars. Thank you.
Thank you, Erik. This wrap up the session of the 1st strategic pillar, strengthening our position in low carbon aluminum. It is all about strengthening our current asset base, working on what we can influence ourselves through a cost discipline, while also positioning our products and solution in the market, differentiating with our low carbon footprint. Now let's move to the 2nd pillar of our 2025 strategy, diversify and grow in recycling and new energy. Executive Vice President for Primary Metals, Eivind Kalvik, will now go through our recycling strategy and ambition toward 2025, followed by Executive Vice President for Energy, Arvind Mos, who will discuss our 2025 energy ambition in Renewables and Batteries.
First, I turn the microphone over to you, Eivind. The floor is yours.
Thank you, Hille.
More than 75% of all aluminum ever produced is still in use, indicating that recycling of aluminum has been making perfect sense since long before we became aware of climate change and increasing sustainability challenge of modern society. But since increasing amounts of aluminum is reaching end of life from applications such as buildings and cars, the generation of post consumer scrap is rapidly climbing, representing a growing challenge if we're unable to deal with this inflow of scrap, but also an opportunity if we transform it into new, high quality products and truly become part of the circular economy. PCS based alumina has a CO2 footprint of 0.5 kilo per kilo aluminum produced as opposed to the European average for primary production of 6.7 kilos CO2 per kilo aluminum produced, a global average of roughly 17 kilos and China at around 20 kilos, 40 times that of PCS based aluminum. From a sustainability perspective, recycling clearly makes perfect sense, especially as aluminum can be recycled over and over without degradation and clearly also holds increasing value, which we can move and help moving towards a low carbon reality. However, the increasing spread between LME and scrap prices indicates that to deal with PCS is by no means easy and is also becoming increasingly complicated as demands for secondary foundry alloys, the traditional outlet for PCS is falling and China is limiting its scrap imports.
Scrap prices are therefore expected to remain low relative to LME in the coming years, in particular for the more complex scrap segments of varying quality. Despite being attractively priced and having a strong sustainability profile, The use of PCS in products other than SFA is limited due to the complexity and the PCS market is somewhat more fragmented and less refined. We believe this high potential, combined with the complexity and barriers of this increasingly high competence area represents an attractive business opportunity for Idro, supporting both the sustainability and our profitability agenda. Recycling is an important part of our value proposition. Across the three business areas, Primary Metal, Extruded Solutions and Rolled Products, we have a total of 29 recycling plants with a combined annual capacity of approximately 2,600,000 tons.
The plants are predominantly based in Europe and in the U. S. While the focus for these plants historically has been to recycle process scrap generated either by our customers and to handle our own process scrap, they are also a perfect fit for the future. To capitalize on the growing generation of post consumer scrap, we are now sourcing increasing amounts of PCS to our plants. Now this is a gradual process enabled by targeted investments to increase recycling capacity and capability.
By sourcing more post consumer and other complicated scrap types, we reduced the cost of our raw material inputs and improve our margins. In addition, we also contribute towards our ambitious sustainability targets by reducing the CO2 footprint of our products. We will, of course, also continue to recycle process scrap. This is a key for the aluminum industry to reduce any waste and recycle all process scrap generated by the various production processes throughout the aluminum value chain. The aluminum industry has done this well for decades already.
So the new development is to deal effectively with increased generation of PCS. Since this is generally more challenging to recycle, it offers new and exciting business potentials for those with the competence and the capability to also bring this scrap back into the loop. Hydro has now established a recycling strategy across the 3 BAs, having recycling activities to pursue the PCS business opportunities. Efforts through the recycling value chain from scrap sourcing to products and customers are required. Starting with scrap sourcing, the main strategic objective is to source more complicated PCS qualities.
This will be enabled by further strengthening of the scrap sourcing organization, more engagement with scrap suppliers and a development and rollout of common ISIT systems to support scrap sourcing across the company. Taking a stronger position within scrap sorting and adopting advanced technologies in this field are identified as a strategically important lever to secure the required quantities and qualities of PCAs. Upgrading lower quality, lower priced scrap for use both in extrusion ingot and sheet ingot as well as potentially melt sorted scrap and cost cells that could be transported and used in our upstream cost houses. To enable us to use more complicated scrap, we also need to upgrade our asset base. Such upgrading capacity increases will require capital, of course, and create more opportunities for some assets than for others.
It is therefore important to apply holistic portfolio prioritization across the hydro recycling portfolio. We will also mature and pursue attractive growth opportunities. Last but not least, we need to develop, market and sell increasing volumes of products with a higher recycled content. We have, over the last couple of years, been able to successfully market our greener brand, Seccal, which contains a minimum of 75% post consumer scrap, achieving higher sales premiums and thus higher margins. These marketing and sales efforts will continue, and they will be strengthened going forward.
We are working closely with our customers to ensure that we meet the current and future requirements as well as exploring how we can meet these in new and more innovative ways with even more sustainable products. Hydro is well positioned to deliver on the recycling strategy. Recycling is not new to us, and we know how to run these assets. The new part is that we want to recycle even more post consumer scrap based on the complicated qualities across the totality of the recycling portfolio. Primary Metal has since 2013 executed on its own recycling strategy, improving the EBITDA margin of its recycling plants from a level of around $60 per ton in the period prior to 2013 to an expected level of around $120 per ton going forward.
This has been done by: 1, utilizing our strong metallurgical and commercial competence to develop recycling friendly alloys 2, investing in plant expansions and upgrades, enabling us to utilize more challenging scrap qualities. As an example, we've just completed an investment in Asu Keka, enabling us to produce even more Hydro Secale billets. 3, engaging more with our scrap suppliers and taking position in developing and utilizing advanced sorting technology. In this area, we commissioned earlier this year a technology pilot for what
we call
ellipseorting. This will enable us to effectively deal with more complicated scrap, sorting them into more uniform alloy groups. We will continue and expand these activities, utilizing our combined value chain position. We have unique flexibility in scrap sourcing with multiple options for scrap consumption, and we can lead the adaptation of innovative greener products such as Hydro Circle. Executing on our recycling strategy will be an exciting journey going forward, supporting both the profitability and the sustainability agenda of Hydro.
This ambition could, by 2025, potentially provide an EBITDA uplift of roughly NOK 1,000,000,000 to NOK 1,500,000,000. We will do this through lowering the hot metal cost, increasing our margins and ideally also increasing prices. The EBITDA uplift is continued upon having developed our capability to double our PCS intake from today's 350,000 tonnes to 600,000 to 7.50 tonnes annually. We can do this either through developing our existing portfolio of assets or through greenfield building or M and A opportunities should that prove to be more attractive. CapEx, we expect to be in the range of NOK 3,500,000,000 to NOK 5,000,000,000.
That should be sufficient to ensure that the area of recycling is becoming an even stronger proof point of Hydro's overall strategic direction of lifting profitability and driving sustainability. I then have the pleasure of introducing Executive Vice President, Albert Mas, who will talk more about our other growth areas, Renewables and Batteries. Welcome, Ovid.
Thank you, Eivind. And now I will share with you some thoughts on the Energy business area. And let me start with the map to the right on this slide. The Leisure transaction that we concluded a few weeks ago, it was a key to take out uncertainty with regard to reversion and to maintain and enhance shareholder value for Hydro. The captive production in a normal year will be approximately 9.0 terawatt hours after transaction And it's a little bit lower, but this is mainly due to compensation due to the quota assets in Liza that are better than in Hydro and conversion from shares subject to reversion to private evergreen shares, which has a higher value.
Hydro will become operator of both RSK and lease's fully owned power plants, increasing Hydro's operatorship within hydropower from approximately 10.5 to 12.9 terawatt hours. And Hydro operatorship is a win win situation and one explanation is the graph to the upper left. An external company has run a benchmark for 6 Norwegian power companies with large and midsize scale, and Hydro comes out with the lowest combined OpEx and sustaining CapEx. And with the synergies in the Liza transaction, we can move even further down. So operational excellence and a scalable platform is one pillar for growing new energy.
But we also have a strong and expanding commercial platform. Volumes under commercial management is 22 terawatt hours in Europe, 1 terawatt hour in Brazil and roughly 4.5 terawatt hour of gas consumption. We serve in energy more than 100 of Helios plants around the world with energy services and power contract management. The graph to the bottom left shows the contribution margin from trading, hedging and production optimization, and you see a steady growth over the last years. And this is what we really now are going to expand further on, the platform we have created.
The energy activities provides a good platform for further growth, adding complementary business, creating value from scaling of existing access and competencies. This platform enable us to 1, engage in attractive growth opportunities, as you see to the left here, with wind, solar and the battery value chain 2nd, to capitalize on competencies and expertise that comes from our extensive experience in connected power markets, really advanced markets. And D, we also want to develop our operational and commercial and regulatory competence into new business. In order to succeed, we will engage in developing new partnership models. We believe that that is a key to unlock value.
We want to extract value from our existing assets, competencies and positions. And we believe that these new activities in sum will position us to access 3rd party project financing resources and ESG funding support. And to the right, through delivering on responsibility and climate, the direction in energy fits well with Hydro's overall ambitions and strategy to have responsible operations and sustainable solutions for low carbon and circular economy. So let me then talk about the 2 more the 2 business units that we now have established from 1st October. One unit is the battery unit and the second unit is renewable growth.
In activity, both activities are a natural step up from existing positions and expertise. And then we first take a look at renewable growth. We will be growing where capabilities match trends and renewable growth is a natural next growth step for renewables portfolio. In the renewable growth, we aim to 1, capture existing value in Hesos power demand and industrial footprint. We need to source approximately 10 terawatt hours to Hydro's upstream positions of operations towards 2025.
And we have learned a lot from the PPAs for wind in Norway and Sweden. Now we want to take a role on all the way from development through construction and ownership with partners. We in Hydro, we are an attractive partner and we can contribute in many areas of market knowledge, asset management, project management and also regulatory competence. Hydro is not alone chasing growth in renewable energy markets, but we are different. If you look up to the left, Hydro has a strong competence and experience all the way from development, licensing, project execution, operationals plant, and we have market insight and trading competence, and we represent a large industrial consumption.
We are not an OEM not producing wind turbines, but we have all the rest and none of the peers we compare with have all this. In the middle here on the page, I just want to emphasize the market experience that I already talked about. Based on 30 years of work in the most advanced power markets, we took this competence also to Brazil in 2015. Since then, we have built up a solid market presence and support our plans in Brazil in different ways. And to the right, we have been a front runner in developing the PPA market for wind power in the Nordics.
And through that, we have gained substantial experience. And from this summer on, we operate the Tonsla Wind Park in Norway, Norway's 2nd largest wind park and we take the power as produced and translate it through our market operations to base load to the smelters. That's the way we create value. And this all creates now the scalable platform, It's a possibility to add on new activities and we organize that activity into renewable growth. So what is it that renewable growth will do and how will it develop value?
First of all, it is a partnership model partnership business model. We will establish SPVs with other companies so that we are focused on each asset that we want to develop. We want to capitalize on our industrial customer base and we want to serve also others based on the central expertise in Hydro. Another thing is important here that this will be a business unit that will require limited capital from Hydro itself through the SPV structure. We have already established a solid project pipeline, consists of a number of opportunities being matured such as project with Skatek, Equinor and GIG in Brazil and also including a floating solar project in Brazil.
But we also have less mature leads that we cannot yet share openly. The agenda spans all renewable technologies, wind, solar and hydropower. The geographical presence will at the start be typical hydro regions, but that is really to benefit from the large captive consumption that we have. We also look, as you will know, as I've seen before, inside fence solution for own plants when it comes to battery and solar installments to take down delivered cost, shaving off peak tariffs, peak power cost. The target for 2021 is to sign investment decisions for 1 gigawatt hour on a 100% basis and heater will be an industrial minority partner in site by site SPVs together with other industrial partners.
The Renewable Growth Business, the value proposition will be also the following. We will participate in leveraging Hydro's energy expertise to capture value throughout the value chain, as I described earlier. And we will also provide a platform for growth beyond Hydro to aggregation of demand and services to the industry. In order to fast forward the agenda, we will be moving towards raising capital externally in 2021. Listing is an alternative under consideration for the short to medium term, but Hydro will remain in a majority position in such a company.
Let me then move to batteries. It's one of the strongest megatrends we see today is the push for decarbonization and electrification to help solve the climate crisis. The EU Green Deal has a target of no net emissions of GHG by 2,050 and also lifting the reduction ambition to 55% in 2,030. This will not be in reach without sustainable shift to electrical vehicles. EU considers the battery industry to be at the heart of the new industrial revolution and has since 2017 put in place a range of measures to pave the way for sustainable competitive industry.
This includes €3,200,000,000 set aside for so called IPCE projects to support research and innovation in the common European priority area of batteries. Altogether, this push from regulators alongside customers and investor expectations drive demand for passenger cars in for electrical passenger cars in Europe, and we see a 13 fold increase up to 2,030 and a doubling the next decade. This is the market where we think we have a lot to offer and where we are well placed for growth. For 115 years, Hydro has contributing to solving global challenges by developing industrial solutions based on green energy. We have strong foothold with production in more than 15 countries and an advanced logistics system.
We have worked systematically to integrate sustainability into our core strategies and business processes since the '90s. The battery value chain is long and complex with optimization of production and high value materials. And we, Hydro, we have a long experience with this from our own value chain where we are integrated all the way from mine to end products and recycling and where a culture of continuous improvements and operational excellence drive process optimization. We have also the know how to build industrial scale. The complexity of the battery value chain also requires pooling of competencies.
Hydro cannot and will not go alone. We depend on strong partners complementing our own skills. And we in Hydro, we are a trusted industrial partner in Norway and Europe, as recently reflected in our strategic partnership with Panasonic and Equinor, which I will revert to shortly. Finally, the battery industry is very much driven by automotive OEM customers. And Hydro has been a supplier to the automotive industry from Norway for decades and also from Germany and other European countries for decades with multiple touch points relevant for the battery sector and for the we really can build on the established relationships we have.
We now seek to leverage these strengths and pursue a strategy with stepwise engagement in the battery value chain with the aim to building a new sustainable and profitable business that will diversify and strengthen Hydro's overall portfolio. To this end, we have established a new business unit called Hydro Batteries, which will perform active industrial ownership of our current assets and develop new opportunities. Going forward, we will expand our battery footprint with selective positions and partnerships across the value chain. We have a strong pipeline of opportunities in place and we have made successful investments with our 1% share in Northwalt, 21% share in Corvus and the fifty-fifty joint venture in the battery recycling joint venture with Northvolt called Hydrovolt. These investments have already created value for us.
We already have a strong track record and a healthy growth potential in these assets. Our Northvolt investment from 2019 has trebled in value according to the last valuation in the market. Nordwold is an exciting company. It spearheads sustainable battery production in Europe. The Nordwold eth plant in Sweden will start commercial production in 2021 with full ramp up to 32 gigawatt hours in 2024 and have potential to expand further.
Heathrow sits on Northwold's advisory board and follow development closely and look at the also new opportunities for cooperation. Our Corbus investments from 2017 has also tripled in value. Corbus is a marine niche leader producing energy storage solutions for all maritime segments. To serve a growing market, a fully automated factory in Bergen was opened last year and Hydro is an active industrial owner and member of Corbus' Board of Directors. Finally, Hydro is founder and active developer of HydroWalt, a fifty-fifty joint venture between Hydro and Nordvolt for recycling batteries from cars.
A pilot plant to test new technologies for recycling will be built in Fredrikstad, Norway with initial capacity of 8,000 tons of battery packs per year. This equals 8 times the size of Norwegian market last year. Battery Realtor with source modules, Northvolt will be the offtaker of black metal mass and heater will be the offtaker of aluminum. This joint venture will capitalize on the well developed Norwegian electrical vehicle market. And in November this year, Enova announced support of NOK 43,000,000.
3 weeks ago, we announced the MoU between Panasonic, Equinor and Hydro. The strategic partnership represent a strong platform to explore opportunities for a profitable and sustainable battery business for Norway and Europe. We will work together towards summer 2021 and our joint initiative will comprise a market assessment under Titan directly with potential European based offtake customers in automotive and non automotive. In addition, we will mature the business case for a sustainable battery business based on Panasonic's position as a leading technology company and its history of innovation in battery cells. Conclusions from the study are expected around summer next year and will in turn inform any investment decision.
And we believe that the combined strength of Panasonic, Equinor and Hydro represent an attractive starting point for exploring the possibilities for a profitable and sustainable battery business in Norway, where we have a strong foothold, renewable power base and close to proximity of the European market. Hydro has the experience in going from R and D, piloting, scaling and then improving. In summary, we see substantial value creation from the completed investments. We have established a battery team of approximately 10 persons and a strong pipeline of potential project. And we believe that we are well positioned to take an active role in the battery industry, build businesses that matters and create substantial value for our shareholders.
To do this, we will 1, prioritize investments where value upside is considerable and where Hydro has a distinct contribution 2, leverage early investments and industrializing innovation 3, we will be investing with solid partners, innovative partners, partners for the future. 4, we'll expose value actively through listing of businesses. And 5, we will utilize a scalable approach to building the portfolio. Our aim is to achieve investments of approximately NOK 2.5 billion to NOK 3,000,000,000 until 2025, resulting in a pro rata EBITDA of investment companies of some NOK 6 100,000,000 to NOK 700,000,000 by 2025 with a potential for continued significant growth. And then I leave it to Hilde to continue.
Let me summarize this strategy in one framework. Our 2025 strategy creates 3 main levers for creation over the next 5 years. Pillar 1, strengthening our position in low carbon aluminum, delivers value of a cost improvement program of SEK 8,500,000,000 that will optimize our portfolio efficiency, while the SEK 2,000,000,000 commercial ambition pursues additional market driven growth based on our low carbon aluminum. The 2nd pillar, diversify and grow in recycling and new energy, represents significant growth ambition matching the current megatrends. We see a potential EBITDA uplift of €1,000,000,000 to €1,500,000,000 in recycling and SEK 600,000,000 to SEK 700,000,000 in batteries, pending investments and attractive business cases in addition to strong pipeline of renewable projects where we expect to generate returns.
To conclude the presentation of Hydro 2025, I would like to walk you through our strategic priorities that will support this value uplift over the next 5 years. The strategic priorities you see here is a continuation of the work from last year, combined with additional priorities that support our 2025 strategy. We will deliver on our 3 value creation levers. Our cost improvement program has strong momentum behind it from the past 2 years. We have extended and expanded this program to 2025 as further initiative have been matured.
A key priority in this program is a robust, reliable, safe and sustainable operation in Brazil. I'm also very excited to embark on our commercial ambitions. We have a strong market position and we have the expertise and the setup to work in close dialogue with the customers and we can differentiate with our portfolio of low carbon products that sets us apart from the competitors. When it comes to our strategic growth initiatives, success depends on developing a pipeline of attractive and profitable investment opportunities in recycling, renewables and batteries. We will take position in geographies and segments of the value chain, which leverage our core industrial expertise and footprint, building on the foundation already in place.
In Rolled Products, we will finalize our strategic review following a successful restructuring over the last year. With this focus on profitability, both on the cost and revenue side, we retain our target for profitability from last year to deliver a road share of at least 10% over the cycle with every business area targeting to deliver above their cost of capital. We reaffirm our ambition targets for climate and environment as sustainability is the basis for our future positioning. And finally, when it comes to the low carbon products, these support our commercial and sustainability ambitions. We will educate the market, stimulate demand and extract additional value, especially for our greener products, lifting our own profitability and driving a low carbon future for our customers and for ourselves.
And how do we execute these priorities? In many ways, we are already on the right track. We will pull the strings we know and do well, but also explore the opportunities where our capabilities match the megatrends, prioritizing capital allocation where we see the best value creation opportunities. Thank you.
We will now take a break until 10:40. After the break, we will proceed with a presentation by our CFO, Paul Schildemo.
Good day, all. It is a true pleasure to spend this time with you again, a bit over a year since our last investor update. I really look forward to seeing you all in person again, but for now, I hope all of you have managed to make it back from the break. Hilde, Eivind, Arvind and Erik have presented our strategic agenda, and I will now expand and detail out the profitability agenda behind the Hydro 2025 strategy, including our financial priorities and targets. The title of my presentation is, as it was last year and as it most likely will be in the years to come, lifting cash flows and delivering returns.
And I'm happy to say that we have made some good progress as well as expanded the scope here in a year that has been everything else but normal. Hydro is committed to creating long term value for our shareholders. Last year, we walked through our framework for doing just that. In the short term, we promised improved cash generation, much helped by launch of our improvement program, optimizing our CapEx spend and release of net operating capital. In the long run, we laid out an ambition to be a preferred industrial investment that delivers stable, predictable shareholder returns.
This requires delivery on all four areas: financial strength, dividend payouts, capital allocation and a clear road map for how we will meet our profitability targets. Last year, I said that we would lift cash flows and deliver returns, and I believe that we are on the right track. Our cash generation from Q4 'nineteen to Q3 2020 of NOK6.9 billion is at the pre embargo levels and the highest it has been since 2017. This is a tribute not only to the cost discipline and ability to tighten the strings in a challenging market, but also our ability to quickly ramp up as market conditions improved in the second half of twenty twenty. Our conversion rate from EBITDA to cash at 51% over the past 12 months is also the best it has been since 2015.
We are carefully allocating capital in accordance with our strategy and framework and in doing so have preserved cash through 2020. Our total shareholder return through 2020 of 16% has exceeded that of our closest peers, both upstream and downstream. Further, we paid out our 2019 dividend in November and are one of the few peers you see listed here who have done so this year. Better return for our shareholders was our goal at our Investor Day in 2019. We have a long way to go still, but I am pleased with the progress thus far, especially given the challenging markets this year.
One of the most significant updates from my side to the market last year was the introduction of our updated capital allocation framework. And when COVID-nineteen hit in the start of 2020, this capital allocation framework became our road map to steer through the crisis. In the toughest period, we made a clear decision to protect our balance sheet and investment grade credit rating and pulling the necessary short term levers while still keeping the long term focus. Maintaining funds from operations was essential in a period of falling volumes and as certain commercial initiatives were put on hold due to lower volumes, we focused on the areas we could control and maintain cash flow from operations to the extent possible. Ensuring a strong balance sheet and maintaining an investment grade credit rating is our fundamental capital allocation.
And to ensure that this was intact, we froze 25% of our remaining sustaining and growth CapEx for 2020. And in doing so, we have managed to save NOK2.5 to NOK3 1,000,000,000 while also freezing the dividend payment until we had better visibility. This helped to avoid a potential downgrade to junk in a period where markets and rating agencies were very concerned with the future. However, as the markets have returned and our cuts preserving initiatives have reaped rewards, we paid our 2019 dividend in line with our dividend commitment to shareholders, which takes priority over growth investment cash flows, but after safeguarding our balance sheet and asset integrity. Even though we have reduced sustaining CapEx in the period we have been through, we are still comfortable that we are maintaining our license to operate from HSE, CSR and compliance perspective as we have either found other safeguarding measures or postponed investments within a comfortable time frame.
We continue our benchmarking efforts on sustaining CapEx and we'll also keep tight capital discipline here in our upstream operations, while ensuring that we prioritize the key asset integrity and lifetime extensions necessary to safeguard our cash flows. That also includes prioritizing tougher between our assets, where especially primary metal have made good progress since last year. Our ability to grow, especially in more challenging times, is also dependent on good operating capital management. And although we've had a significant market tailwind over the latter years, we have also optimized inventories and pushed terms to free up cash. In addition to closing down and selling plants or operations to make room for new growth, our largest current portfolio review of rolled products is still ongoing.
And finally, one of the benefits of maintaining a robust balance sheet is to be able to think long term through the cycle highs and lows, and this has been on the top of our agenda as represented by our executed as well as planned growth moves into recycling, renewables and batteries. When it comes to the allocation of return seeking and growth capital, you should expect this to reflect the same strategic modes that we introduced last year. We continue to sustain and improve our downstream operations to ensure robust cash flows, servicing our shareholders and return seeking investments for the downstream and new growth areas. Return seeking capital allocated upstream will be used to maintain or improve position on the cost curve or to improve the footprint from our operations as represented by the fuel switch projects in bauxite and alumina. Our return seeking capital will be allocated to organic and inorganic selected growth in Recycling, Extruded Solutions and Energy.
Rolled Products is still in a strategic review. However, we have during the latter year identified good returning growth projects, especially within recycling to lower metal cost. And if we decide to remain a 100 percent owner of road, you should expect selective growth within this business area also, in line with our overall company strategy. We have several initiatives underway to move our profitability indicators into positive territory. So let's take a deep dive into some of these.
When it comes to generating cash, we focused on 3 key levers last year, our cost improvement program, CapEx and net operating capital. The focus this year remains largely the same, but we have even more ambitious targets set towards 2025. Our cost improvement program has increased from NOK7.3 billion to NOK8.5 billion improvements on EBITDA, and we have added an additional SEK2.0 billion in commercial ambitions on top of this. In terms of CapEx, we see potential to further reduce our outlook over the medium term with a guiding of NOK 9,000,000,000 to 9 point 5,000,000,000 on sustaining and return seeking initiatives required to deliver on improvement programs and commercial ambitions. We will continue to maintain an efficient working capital management.
However, we have not stretched our target further from last year's level as we are approaching sustainable inventory levels, and the latter years have shown us the importance of some safety stocks. Finally, we have initiated our strategic growth initiatives that we went through earlier in the presentation. Our value creation journey rests upon 3 key building blocks: the cost improvement program, our commercial ambitions and our strategic growth initiatives. Without executing these, it will be a tough struggle to meet our profitability targets and maintain our relative position in the industry. While the commercial ambitions and strategic initiatives are new, the cost improvement program builds on much of the work done last year.
So I will start here and explain the main similarities and differences. Our 2025 cost improvement program uses the same 2018 baseline as the original and the NOK4.1 billion savings from 'nineteen to 'twenty is included in the overall target of NOK8.5 billion. This, however, is where the similarities end. This program has a cost and operational focus as opposed to last year's program, which included downstream commercial effects, which were dependent on margins. Now we have split the 2.
Starting from the left, within the Boilean 8.5 program, volumes remain a key lever, and many of these improvements have, especially in B and A, are well underway to be achieved. The NOK2.7 billion in B and A comes from ramping up Alunorte and Paragominas to full capacity following the curtailment and has also been achieved this year despite some smaller setbacks earlier. However, there will still be a positive full year effect next year from the ramp up in bauxite and alumina. The NOK1.1 billion in primary metal comes from the restart at Husnes and the reversal of the curtailment at Albras. In terms of operational excellence, NOK0.6 billion comes from bauxite and alumina.
As Alunorte is already very efficient refinery in terms of fixed cost, most of the improvement potential here comes from optimizing consumption factors, mainly improving the energy mix to reduce gigajoules per tonne and also from the transition from fuel oil to LNG with these savings coming toward the latter of the 2025 horizon. In Primary Metals, the SEK900 1,000,000 operational excellence contributions are a combination of improvements in technical parameters, such as reduced raw material consumption, current efficiency improvements and lower scrap rates. There are also elements of tonnage creep in this figure if the market allows for it. Rolled Products contributes NOK200 1,000,000 through its metal cost optimization project, increasing scrap usage in all plants. This only covers metal cost optimization based on existing investments.
Within the recycling ambition for the group as a whole, there are also significant metal cost optimization ambitions in addition to what you see here that requires further maturing and further investments. Within energy, the scope of the program is limited to improvements in our Energy Classic area. So the benefit of growth areas are not included as they were in the original program. The NOK0.02 billion, seen here for energy, comes from operational handling of additional volumes. If we move on to fixed cost, I'm pleased that nearly all of our business areas have stretched their fixed cost improvement ambitions with strong contributions from primary, extrusion and rolled products.
The outlier here is B and A, where we will face fixed cost headwinds in Paragominas as we will increase costs with moving into a new mining area and by utilizing the tailings dry backfill technology, which on the other side will lead to significant CapEx savings. The general fixed cost improvements in the other business area is a combination of organizational restructuring, rightsizing. You may see that the staff functions and centralized initiatives are reduced from last year, and that is because as these have been anchored and substantiated, the positive effects are now allocated out to the business areas. In addition, Extruded Solutions continues its portfolio restructuring in 2021, and energy savings here include synergies from the Lusse transaction. The final lever of our improvement program is procurement, where the target from last year has been more than double as we utilize a consistent targeted and high speed approach across the company.
Primary metal, rolled products and extruded solutions are expecting NOK900 1,000,000 in total, and I have followed this initiative closely over the past year to a targeted company wide program, and I'm very pleased to see that the additional potential identified in these areas are now targeted for delivery. Now let's move over to lever 2, the commercial initiatives highlighted in purple. Unlike the previous program, these initiatives are market dependent. The ambitions we set today are based on our outlook for the market, but as you know from past years, things can change drastically quite quickly. The main driver of our commercial ambition is Extruded Solutions, which has identified NOK1.2 billion upside.
Extruded solutions will play a major role in strengthening our position in low carbon aluminum, both taking market shares in key growth segments and also expanding margins through new customer projects. The CapEx required to meet these improvements are semi return seeking and semi sustaining as sometimes you need to invest in new equipment for new types of products for customers, whereas other times you can use existing equipment when new product ranges are introduced, which makes defining base sustaining CapEx a bit challenging at times. For Rolled Products, the NOK 500,000,000 uplift comes from portfolio high grading, positioning toward higher margin segments like automotive and battery foil. The main driver of our commercial ambition is excluded solution, which has identified a NOK1.2 billion upside. Extruded solutions will play a major role in strengthening position in low carbon aluminum, both taking market shares in key growth segments and expanding margins through our new customer projects.
The CapEx required to meet these improvements are semi return seeking and semi sustaining as sometimes you need to invest in new equipment for new types of products for customers, whereas other times you can use existing equipment when new product ranges are introduced, which makes defining base sustaining CapEx a bit challenging at times. For Rolled Products, the NOK500 1,000,000,000 uplift comes from portfolio high grading, positioning toward higher margin segments like automotive and battery foil. The NOK0.3 billion value uplift in primary metal is driven by growth and extracting premiums in our greener brands, HydroSilkal and Hydro Riduxa. This is a figure with an interesting upside if we really see strong moves towards carbon pricing in products. Finally, in lever 3, our strategic growth initiatives in recycling, batteries and renewables, we have a focus on building value over the next 5 years.
These programs will be followed up through different metrics than the aforementioned programs and are therefore not included in the targets. In total, we expect the remaining cost improvements to require around NOK750 1,000,000 per annum in the period 2021 to 2024 in CapEx, while the commercial ambitions will require around SEK1.25 billion per annum. As we keep a high focus on cash, optimizing net operating capital has been one of our top priorities since Investor Day 2019. Our focus has been to reduce inventory levels across all business areas and optimize material flow from raw materials to finished goods. The development on an absolute level is also positively impacted by lower volumes and prices, whereas the operating capital days reflect revenues falling faster than the operating capital base.
The development of operating capital base is expected to reflect volume recovery in our business with days decreasing as revenues come up, but absolute operating capital levels coming up on potentially higher prices and volumes. Optimizing our capital allocation is my main priority. In an industry like ours, the key is identifying the optimal sustaining CapEx level, while also identifying and allocating capital towards growth projects that provide a good business case and support our strategic direction. Earlier this year, we cut our original CapEx guidance of NOK9.5 billion to NOK10 billion by 25% when COVID-nineteen shook the market. And we have managed to tighten the screws even further and are estimating to spend around NOK7 1,000,000,000 in CapEx in 2020.
Moving forward, we had anticipated a level of NOK9.5 billion to NOK10 1,000,000,000 in the period for 2020 to 2023 for growth and return seeking CapEx necessary to deliver on our improvement ambitions. However, we are now reducing the range to 9% to 9.5% from 2021 to 2025. Of the CapEx from 'twenty one to 'twenty five, about 70% is sustaining CapEx, much of which will be allocated upstream. The largest projects here include a new mining area in Paragominas, continued pipeline replacement and asset integrity and lifetime extension investments in Primary Metal. We also aim to provide a long term sustaining CapEx annual level of around NOK6000000000 to NOK6.5 billion moving forward, reflecting that NOK21 billion to NOK25 billion will see higher than normal sustaining CapEx levels, but this is also impacted by the significant cuts that we've had in 2020.
The return seeking CapEx is the CapEx we require to deliver on our improvement ambitions, whereas the growth CapEx includes the growth planned in 2021 in accordance with our capital allocation framework and strategic modes. Further identified growth initiatives will come on top of these if we mature sufficiently attractive business cases and would then also supplement our communicated improvement targets and ambitions. The cash improvements are an important part of our ambition to improve our returns, but we still need to put that into a wider shareholder return context. Our goal is to create returns above cost of capital over the cycle and provide attractive total shareholder returns, and this is represented by our 4 overarching pillars: financial strengths and flexibility, robust shareholder payout, roadmap to profitability targets and clear principles for capital allocation. In terms of financial strength, we will continue to prioritize to maintain our investment grade credit rating and ensure our balance sheet is robust, liquid and therefore able to manage the volatility in our industry.
Our discipline in the managing the balance sheet allows us to still pay dividends in a difficult year like 2020 and provides us with the flexibility to pursue our new strategic growth initiatives. Previously, we followed 2 key ratios to ensure our balance sheet remained investment grade. 1 was adjusted net debt, including equity accounted investments to equity below 55% and 2, funds from operations to adjusted net debt, including equity accounted investments above 40%. Moving forward, we will exchange these two metrics with adjusted net debt excluding equity accounted investments over underlying EBITDA below 2x. The rationale of replacing the old ratios is to improve clarity and communication, be closer to market standards and be consistent with our plans to change focus from underlying EBIT to underlying EBITDA from a performance perspective going forward.
We set the standard at 2x based on our current balance sheet solidity ambitions and investment grade credit rating requirement and consistency with the historical development in the funds from operations to debt metric. The rating agencies are comfortable with the proposed change and will, in any case, rely on their own internal analysis. When it comes to the other segments of the framework, I earlier explained how our principles for capital allocation is our steering framework for the business. So now I would like to spend some time discussing our shareholder payout policy and our roadmaps to profitability on our 2025 horizon. Our philosophy is to offer competitive and predictable dividend to our investors, which we strive to maintain throughout the cycle.
Earlier this year, our dividend decision was placed on hold due to market conditions to ensure we safeguarded our balance sheet in a time of very low visibility with internal and external low case scenarios looking quite challenging. This decision was within our existing capital allocation framework, where we always safeguard our balance sheet first, then service our shareholders and then evaluate investments in our operations. So in a given year, you should expect us to pay at least SEK1.25 per share and a minimum of 40% of net income over the cycle as ordinary dividends with the possibility of extraordinary dividends or share buybacks in especially good times. During the period from 'fourteen to 'nineteen, have an average dividend payout ratio of 75 percent or NOK1.25 per year. This results in an average dividend yield over the past 6 years of around 3%.
We continue to work towards delivering underlying Russia target of 10% over the cycle. This capital returns dashboard was introduced at Investor Day last year and represents a summary of the key relevant measures. Our 10% target is 1% higher than the long term nominal cost of capital to account for the items excluded from underlying results, and these include impairments, gainslosses on investments and also restructuring costs. Over the past 5 years, we have reached an average underlying ROACE of 6%, which is below the cost of capital and the targeted level. Although these figures are not directly comparable as the cost of capital in the last 5 years is likely to be lower than the long term expectation due to the low interest price environment.
With about SEK 96,000,000,000 in capital employed, almost 60% is allocated upstream and a quarter in Excluded Solutions. The returns in recent years have been driven mainly by a challenging market upstream impacted by Alunorte and the cyber attack last year. The high volatility of our returns reflect that 60% of capital employed is allocated to the cyclical upstream businesses. We will now go through what Hydro and Yves business area will do in order to achieve the 10% target and what are the key upside and downside risks. Let us now look at the scenarios that show EBITDA, cash flow and ROACE potential after we have delivered on the planned improvement measures and with different pricing scenarios in 2025.
Let me also remind you that these scenarios are not forecasts, but are simplified indicative long term potential based on sensitivities. In the additional information, you will find a detailed description of the assumptions used for these calculations as well as a list of additional factors that will influence the results positively or negatively and are not taken into account. We have also adjusted the starting point of 2019 to have a more representative margin, which is similar to the margin in our improvement program, which includes adjusting LME to $1900 per tonne, which is the $16 to $18 average and PAX to $3.30 per tonne. We have adjusted Alunorte and Paragominas production to end 2019 run rate of around 90% and multiplies these margins from the improvement program as a starting point for B and A. And in Excluded Solutions, we have removed the impact from the 2019 cyber attack.
Now if we look at the Roachia potential, we see that the improvement ambitions should take us from 5% to 11% with the adjusted 2019 margins. If we adjust the prices further to current spot prices, Roach increases to 14% at 5 year average. We see a Roach of 9% and at CRU price expectations, we see a Roach of 12%, indicating that our returns are dependent on the market and macro developments driving prices, but also that our target over the cycle are realistic. When it comes to further upside from the improvement potential, I'm very happy to see the traction of our green products, HydroCircale and Hydro Redoxa, and that we have started seeing customers willing to pay a green premium or increase their volume commitments. I believe that our sustainability focus will be a key differentiator in the years to come also from a returns perspective.
In addition, in line with the capital allocation framework, we will continue to review our portfolio to identify noncore and nonperforming assets, trapping capital, and we'll only be executing on growth projects with high return potential. On the key risk side, market and macro development are key, including the trade restrictions. Operational disruptions, project execution, ability to deliver on our improvements may reduce the potential. In addition, actions of our competitors may impact our relative cost and market positions, while regulatory frameworks and compliance will always highly influence the environment we operate in. We have also identified underlying EBITDA potential and cash flow potential using the same logic.
The cash flow potential is after the total CapEx as well as the dividend floor commitments to the shareholder, indicating the cash available for further growth or additional shareholder return. For us to reach the overall Hydro return target of 10%, every business area has to contribute by delivering on or above their differentiated cost of capital. If we start with bauxite and alumina with 22% of Hidos capital employed and a long term nominal cost of capital of around 10% to 11%, they have managed to achieve 5% on average over the last 5 years. This was a result of the challenging alumina market, but also the embargo situation in 2018 as well as a number of operational challenges. Our first priority here is to maintain production and lift operations back to the pre curtailment levels.
We have identified NOK 3,000,000,000 in improvement potential, which mainly comes from increases in volumes following the containment reversal. Looking at the CapEx development, we see an average annual level of between NOK 2,000,000,000 to NOK 3,000,000,000 with a large share of sustaining CapEx, reflecting the capital intensive industry, but fairly minor growth and return seeking projects in line with the strategic themes of sustain and improve for bauxite and alumina that mainly reflects historical profitability in this division. The major return seeking project in the coming year is the Alunorte Fuel Switch project, which is a key project from both our profitability and sustainability standpoint. If we look at the scenarios and the Roachia potential, we see that our improvement efforts will take us to a Roachia of 13% with pucks of $3.30 per tonne using the 2019 adjusted baseline. The returns range driven by different market scenarios where it's between 7% 12%, proving that market help is indeed needed to support our internal efforts also here.
The ramp up of Alunorte is well underway. Optimizing sustaining CapEx is also an improving priority given relative large sustaining CapEx need in this capital intensive industry where, for example, the tailings dry backfill is a good contributor. We are approaching the time for opening a new airplining area at Paragominas, which will require large investments. In addition, bauxite and alumina is maturing the fuel switch project aiming to substitute fuel oil at the refinery with LNG and not only reduce emissions, but also substantially cut energy costs. Commercial excellence is also high on the bauxite and alumina agenda as we continue to shift the portfolio over to PAX and to optimize our external sales portfolio.
When it comes to other risks, regulatory and country risks are high in Brazil, emphasizing the importance of the work we are doing on the CSR side in order to establish good relationships with local communities, partly mitigating those risks. Primary metal accounts for about 36% of Hidos capital employed, with an additional 2% allocated to metal markets. With 10% to 11% nominal cost of capital, primary metal reached 6% in the last 5 years, below our target. Metal markets as a separate reporting area has delivered very good returns of 19%, well above their cost of capital of 7% to 8%, reflecting good results and profitable growth in recycling combined with relative small capital employed. Our recycling segments have really earned the right to grow, which is also a part of the reason for this being a strategic growth area for Hydro.
The improvement potential in Primary Metal includes NOK3 1,000,000,000 in improvements and NOK3 1,000,000,000 in commercial improvements, With a relative stable sustaining CapEx level of around NOK2 1,000,000,000 to NOK2.5 billion annually, growth CapEx is expected to come down as we have completed the Husnes Restock and reflecting the sustained and improved strategic theme. We are looking at selected growth opportunities within recycling and metal markets, representing the majority of the return seeking and growth CapEx and supporting our recycling growth ambition. If we look at the Roachja scenarios, the improvement measures will lift Roachja from 3% in 'nineteen to 10% at 'nineteen adjusted prices. In different market scenarios, Roachia will be between 8% at last 5 year average to 18% using current spot assumptions. The wide RUACE spread indicates also the high PM earnings sensitivity to LME prices.
When it comes to further potential, commercial differentiation, including our greener brands and high share of renewables, will become increasingly important over time. Further attractive opportunities within recycling, portfolio optimization as well as continued efforts in digitalization and automation to increase efficiency will continue to play a role in Primary. We also expect a positive impact from CO2 pricing from 2021. On the risk side, in addition to the market and operational performance, our relative cost position is key. The simplified assumption here assumes that our relative position improves with the improvement measures.
However, if our competitors run their own improvements at the same time, our position may not necessarily change. Furthermore, regulatory and country risks are also important here, especially when it comes to Brazil and Copar. Extruded Solutions account for 27% of Hydro's capital employed. In the last 3 years, since becoming a part of Hydro, Extruded Solutions delivered 7% through Aceh, in line with the nominal cost of capital of 7% to 8%. The returns reflect leading market positions in key markets and strong cost focus and portfolio optimization.
Excluded solution has a 2025 improvement potential target of NOK1.3 billion for 2025 and a commercial ambition of NOK1.2 billion. The inflation effect over the period is expected to be negative NOK1.2 billion. Reflecting a good historical performance as well as a good outlook, Extruded Solutions has a selective growth strategic theme, supporting their ambitions for growth within the attractive product segments. This is then translated into capital allocation with the majority of the SEK 2,000,000,000 CapEx per year allocated to growth and return seeking projects. Looking at the Roach potential, the identified improvement measures will lift Roach by 4% to 11%, well above the targeted cost of capital of 7% to 8%.
Results in exclusion are not directly driven by the LME price, but we are dependent on the demand development for the aluminum products as such as well as macroeconomic stability and GDP growth. The further upside for Excluded Solutions includes increasing focus on operating and fixed costs, partly driven by the continuous portfolio review and optimization as well as growth investments and stronger markets. On the risk side, in addition to market and operational performance, the key risk for Excluded Solutions is the ability to meet customer expectations, which is really a prerequisite for leadership positions in the attractive premium growth markets. Capital employed in rolled products is about 13% of euro total. Returns averaged 4% in the last 5 years, below the cost of capital due to margin pressure and high competition in some product segments, high labor inflation in Germany as well as a number of operational issues.
The low returns are the main reason for the initiation of the strategic review last year. Rolled Products has a 2025 improvement target of NOK1.1 billion and NOK0.5 billion commercial ambition. We expect inflation to eat up some of the cost improvements, roughly NOK600 1,000,000. The sustaining CapEx of around NOK1 1,000,000,000 is needed to deliver on the improvements and to maintain the assets in good shape. The return seeking CapEx for our products is mainly to support our improvement ambitions within organizational rightsizing and procurement.
There is also significant growth potential within recycling volumes in Rolled Products. And if the ongoing strategic review results in a continued ownership of Rolled Products, one should expect increased return seeking CapEx being allocated to deliver on the recycling growth ambitions, which will also stretch the improvement potential above current levels. The improvement measures are expected to take Rocha from 3% in 2019 to 8%, which is at the high end of the cost of capital range of 7% to 8%. The potential next steps in the strategic review may represent further upside. In the meantime, there is also further potential beyond the improvement program strengthen operational and commercial excellence, implement more digitalization and automation in the production process, reduce metal costs with further recycling as well as continue to shift product portfolio towards attractive high margin market segments.
Not being able to improve operational performance, trade restrictions, combined with intensifying competition and lower demand represents the downside risk. Finally, energy accounts for a very small portion of the total Hydro capital employed of right below 1% due to the depreciated asset base. We expect capital employed to increase following the RSK Leisure Transaction and the revaluation of book values in connection with the transaction will bring book values closer to market value and reduce larger levels for energy from 2021. The transaction received competition clearance in early November and is expected to close at the end of the year. The Energy business area has seen Arwacha of 17% in the last 5 years, well above the cost of capital of 6
percent to 7%.
However, as most of you are well aware of, the alternative market price for energy assets are well above our book values, resulting in a market price through Aceh around cost of capital. We expect an side to Energy EBITDA from 2021 due to the new external and internal contract portfolio. On the capital allocation side, the growth CapEx is related to investments within our new growth areas of renewable energy and batteries. Growth investments are included here for 2021. And if we mature interesting opportunities within this space, you should expect more growth and return seeking capital being allocated here for the 'twenty two to 'twenty five period also.
The earnings uplift in Energy from 2021 of NOK 700,000,000 consists of NOK 400,000,000 related to the expiry of a power contract entered into in 2,008 at unfavorable terms in today's market. In addition, due to the expiry of our 6.4 terawatt start craft contract by the end of this year that is now being replaced with a number of new wind and hydro sourcing contracts, the internal power price from energy to primary will be somewhat higher, in line with the average external pricing of these contracts, resulting in a gain of NOK300 1,000,000,000. If we were to use 2020 as a basis for these calculations, the effects could be NOK 650 1,000,000 for energy and approximately NOK 700,000,000 to NOK 800,000,000 for the internal contract sales, reflecting significant changes to NOK development and spot prices in 2020. However, in this scenario, there is an offsetting impact for primary metal related to the million due to the weaker NOK, and the total hydro effect would be approximately NOK1 1,000,000,000 mainly driven by higher contract loss related to legacy contract. Note that the production levels in 2019 were fairly low at 9.2 terawatt hours.
We have therefore increased volumes to 9.4, which is the annual normal production level following the RSK Luce transaction. In the transaction, Leuser's assets were at a higher quality and positively impacting the EBITDA margins. The improvement of NOK200 1,000,000,000 reflects both the volume and impact of higher quality assets. In addition, there are growth projects in renewable growth and batteries that have not been included in the underlying EBIT uplift potential. Earnings in Energy are driven by the hydropower production and prices, which is a key uncertainty.
Current power prices are significantly lower than prices observed in 2019, and at the same time, there is usually an inverse correlation between prices and production volumes. Macro developments as well as the regulatory frameworks are also an important consideration when it comes to risks going forward. And as already mentioned, we expect capital employed to increase following the closing of the RSK Leisure Transaction. If we then take a look into our guidance for 2021, then we expect Alunorte to run at the nameplate capacity of 6,300,000 tonnes. In primary, we expect liquid production at 2,200,000 to 2,300,000 tonnes, and the production levels in the remelters are expected to be back to normal levels.
And for 2021, we expect this to be roughly 550,000 tonnes. In Excluded Solutions and Rolled Products, there are less visibility due to the uncertainty in the markets. We expect 2021 volumes to be broadly in line with overall market growth expectations. CRU estimates growth of 8% year over year for general rolled products in Europe and 8% to 9% for general extrusion demand in Europe and North America, respectively. For energy, we expect production at normal levels in 2021.
The production level after the Leisure transaction is 9.4 terawatt hours. As we have mentioned earlier, we have entered a dollar BRL hedge in Alunorte on 30% of P and A exposure for the period 'twenty one, 'twenty two. In addition, we have also entered an integrated margin hedge of 100,000 tonnes for 2021, which is allocated primary metal and bauxite and alumina, including a fixed price alumina agreement between the business areas. To conclude today, I would like to summarize what makes Hydro an attractive investment opportunity. Upstream, we operate at a competitive cost position in the 1st and second quartile for our industry.
We are experienced in operational excellence and cost discipline. Our SEK8.5 billion improvement program and our enhanced operational robustness in Brazil will help us improve this position in the years to come. Downstream, our portfolios are positioned in attractive segments, such as automotive, CAM and Building and Construction. The demand for aluminum in these segments will grow in the coming years, in line with the megatrends. And we have deep competence in these segments and have developed markets for our products through innovation, solution development and working side by side with our customers.
Therefore, we are well positioned to take even larger shares as these segments demand more aluminum in the years to come. Our low carbon products further our positioning. Customers choose Hydro because our products have among the lowest CO2 footprint on the market, and we expect to double and triple our volumes for Hydro Reducer and Hydro Sirkal next year. We have strong customer relationships allowing us to shape demand for greener products in the future, and we have the capacity and competence to supply it. We are a safe investment.
We prioritize maintaining our investment grade rating, and we monitor our balance sheet with stringent liquidity requirements represented by our new adjusted net debt to EBITDA target. We are also an investment that generates cash returns to shareholders. Over the past 11 years, Hydro has paid its annual dividend through the cyclicality of our industry. We want our investors to know we are a stable dividend stock with a floor of 1.25 per share and aim to pay out a minimum of 40% of net income over the cycle, which we have exceeded over the latter years. Finally, I conclude with our strategic growth arenas.
If you are investing in Hydro, you are investing in a growth journey in sustainability. We have seen strong returns in our investments in batteries and strong margin development in recycling. Renewable energy also offers high multiples and historically strong returns on investments to those investing early stage as we intend to. Moving forward, we offer a strong foundation and a clear strategic direction for sustainable growth. Join our journey in shaping industries that matter.
Thank you for joining us this Capital Markets Day, and we look forward to hearing from you in the Q and A, which begins at 11:30. Thank you.
Hi. We're just listening to the remainder of the presentation and we'll be right here in 30 seconds.
You're investing in here, though. You're investing in a
Hello, operator.
Yes, if you'd like we have people queuing for a question. Would you like to take the first question? No, no. We will start at 11:30. Thank you.
We will now take our first question. Please go ahead caller, your line is now open.
Good morning, everybody. It's Jason Fairclough from Bank of America. Just a couple of quick ones from me. Fascinated about your slight change of direction into these new businesses. And you've discussed potentially listing the hydropower business.
You've discussed potentially listing the battery businesses to expose value. And I'm just wondering what's the earliest we could see these stock market
We have been talking about attracting some capital for the renewable growth venture that we are setting up. And one of the alternatives for that could be a listing, another alternative could be getting some partners on board. However, this is not determined yet what solution we would potentially go for. And on a timing level, this is something we will be working on in the years to come. But just to be sure we clarify, we are not talking about the listing of the whole energy business area, but the potential of the new renewable energy growth business.
Okay. And just a follow-up if I could. So as you branch away from your core competency in metal, is there a risk that you turn Hydro into something of a conglomerate or dare I say it back into a conglomerate because once upon a time that's what it used to be?
I think the main answer to that is that we are with this strategy 115 years. And so and with the need for more renewables, we see that we can match our capabilities to that megatrend. And we would like to explore opportunities in all the different parts of our value chain and our businesses. And we look at this as an opportunity to scale up this part as it supports, let's say, the need for more renewable. And we believe that we have the capabilities in from producing energy to be a high to be consumer of energy.
And as I will not explain, we are in that whole value chain of energy.
Okay. Thank you very much, Hilda. Thank you, Paul.
Thank you.
We will now take our next question. Please go ahead caller, the line is open.
Hi. It's Dan from UBS. Thanks for the questions. Follow-up question, first one on the renewable energy investment plan. A gigawatt of renewable energy, I guess, would be about US1 $1,000,000,000 of CapEx.
And you've indicated that you would potentially bring in partners, look at equity funding structures and the like. Do you have a limitation? Or could you give us a sense of how much of your own cash flow you would intend to commit to or own cash you would intend to commit to that vehicle? And or would it be fair to assume this would be off balance sheet? That's the first question.
Thank you, Dan, for a good question. We aim to finance this venture with as little possible CapEx from Hydro's side as possible. And so we will be looking for capital in the specific project STVs with also some capital rates necessary on the top level of such a venture. So if you look into our CapEx guidance for next year and coming, it doesn't include a lot from our side into this venture. I don't know, Alvid, if you would like to supplement.
No, I think it is, let's say, as Paul says, we will set up separate SPVs for each of the projects. And of course, we are still maturing many of these and the ownership share is not decided upon. The debt flow is not decided upon. So on this journey, we will inform the market that there are things to bring to the market.
Great. And then another question related to CapEx. So I think if you look at your core guidance, it's come down by about NOK 500,000,000 despite the deferral or reduction in 2020 CapEx. Can you give us a little bit more detail on where those CapEx reductions have come from? What FX assumptions you're using for those?
See the BRLs have been particularly weak as has the NOK, so how much FX impact there is? And are we right in saying that we've got a base CapEx of 9% to 9.5% and then on top of that, we would add 3% to 3.5% for the recycling and 2 to 2.5 for the battery related investments over the next 5 years assuming those investments go ahead. Is that the way we should be thinking about it?
Yes. I think when we look at the CapEx and the changes from last year, you correctly reflect upon the point that we have reduced quite a lot in 2020, and some of this will come back in the years to come. And this is also represented by the fact that we are at the CapEx level, somewhat higher than what our long term level is on the sustaining side. There's both larger asset lifetime extension programs, but also a movement of CapEx from 2020. On the other side, we have also been working quite actively to identify areas where we can reduce CapEx for the longer term.
So the tailings dry backfilling example in B and A is a good such example. And when we look at what it will cost to expand into the mining area in bauxite and alumina, there we have also taken CapEx estimations down from what we have operated with earlier due to different projects that set up than originally planned. So there's a combination of both two elements, which net out to a lower level. And then, of course, we do have some currency tailwind where we see currencies moving in a more favorable direction. We don't lock currencies on the CapEx portfolio, but use close to market rates for estimating CapEx going forward.
So there is a positive effect there where relevant.
And then the additional expenditure of the year? No, then the other public, sorry.
How this guidance is set up is that if you look into our guidance for 2021, then basically this includes everything which we know and is on the table for next year. So in 2021, there are both recycling investments, there are battery investments, and there are also growth and return seeking investments in excluded solutions. There is also included a limited return seeking investment in Rolled Products, which we need to deliver on the improvement program. But then in the years following 2021, you do only have the CapEx which is required to deliver on our improvement targets. So if we are to increase our targets with the SEK 1,000,000,000 to SEK 1,500,000,000 that you see in recycling or the potential in batteries, then that would also come at a higher CapEx.
So on both sides of the equation, on the earnings side, you have not included the benefit from it. And on the CapEx side, you have not included the benefit of it as these projects will mature in the years to come. And you would expect them to move gradually into the equation if we see that the market allows for it.
Got it. Very good. Thank you. Thank you, Dan.
Thank you. We will now take our next question. Please go ahead. The line is open.
Hello. Good morning. This is Ioannis Masvoulis from Morgan Stanley. Thanks for the presentation. I had a few questions from my side.
The first one, just a follow-up on CapEx and Dan's questions. If I look at last year's presentation, you talked about €10,000,000,000 to €11,000,000,000 growth in return seeking CapEx that was needed to deliver the EBIT improvement plan. And I think now you're talking about the remaining $3,000,000,000 that is needed to be spent. So how do I reconcile the 2? And then simplistically, if I look at your 5 year CapEx outlook, it suggests that growth in return seeking is about €3,000,000,000 to €3,500,000,000 per annum.
Let's say it's €15,000,000,000 over a 5 year timeframe. You give us a rough breakdown just to make sure I've got all the moving parts? And I'll stop here. Thank you.
I think if you start with your original question, what we guided for last year of investments required to deliver on improvements have come somewhat down. That is correct. We have seen that we have been able to reduce more cost and target more cost reductions, and that's what we saw last year, especially within the Excluded Solutions business areas, as we've also talked about in previous quarters. But the figure you referred to of SEK 3,000,000,000 sounds a bit low. As I mentioned a bit earlier today, on the improvement side, the pure improvement program of SEK 8,500,000,000, we expect to need somewhat below SEK 1,000,000,000 a year or SEK 750,000,000 to be more precise per year to deliver on those.
And for the commercial ambition, we need around SEK 1,250,000,000 per year to deliver on those. So if you add up the totality of these 2, that is what you need to deliver on the targeted improvement program, so a bit higher than the figure you referred to. And then your second question did I clarify both questions or?
No, go ahead please.
No, I'm just asking you was there anything more to the second question?
It's just on the CapEx. If I look at the what you're going to spend above sustaining is about in total, I think sustaining sort of €6,500,000,000 or so on average and total CapEx is €9,000,000,000 to €9,500,000,000 that ends up being more than the numbers we just mentioned if you take a 5 year cumulative figure. We got €3,000,000,000 to €3,500,000,000 per annum pretty much for the next 5 years. So I'm just trying to figure out what additional initiatives you may have included there
on top of the On top of Okay, sorry. Yes, so on the sustaining CapEx, yes, because we say that we will be spending 6.5% to 7% compared to the 6% to 6.5% on an annual basis and you multiply that by 2 years. No, the biggest sustaining projects is the new mining areas in Paragominas. As I mentioned earlier, we're moving into a new mining area, which requires infrastructure investments and similar. We have the pipeline replacement.
As you know, that's not something we do every year, and we've spent some on that this year and some into next year. And we also have asset integrity investments in primary metal. So some of the equipment is approaching end of life. And in order to maintain the cash flows, we need to change up some of that. So when you add the totality of these projects, you are at the level which is higher than our long term guidance.
Okay, understood. Thanks for the clarification here. And one question on the downstream now, because you mentioned that you expect your volume growth next year to be similar to comparable to market growth. But if I look at Extruded Solutions sales, we're looking at sort of 1,100,000 tons this year. And if I look at 2017, 2018, you were close at 1.35000000, 1,400,000 tons.
So what should we expect on a volume basis for 2021? And when do you really expect to if you do expect to reach those 2017, 2018 levels? So what sort of a time frame?
Yes. I mean, just to backtrack a little bit in time to the cyber attack in 2019. Of course, we did lose some speed on the volume in 2019. Also, we've seen that due to COVID in 2020, but we are basically on business plan next year looking to reach just above 1.2%, and we are seeing a somewhat stronger growth than the market average on the volume forward. So we are looking to catch up basically moving along to 2022.
I think it's fair to say that we'll be back on track from 2017, 2018 below.
Okay. Thank you. And just the last question in terms of the longer term growth ambitions. I fully understand the potential and the competence you've got around recycling and renewables. But I did want to ask you about the battery obviously capital?
What sort of strategic advantage you have in that segment that makes you better positioned to invest as compared to some of the other industrial companies?
Well, as was explained in the introduction, we do have capabilities in the material area, the understanding of the materials. We have the industrial competence. We have the manufacturing competence. We can provide process and improvement competence. But we have to match that with a technology provider as we do now with Panasonic as well as that we know also the automotive market.
So from that sense, we have we can offer several competencies and experience, which can be matched with a technology provider and in a partnership with like we have done with Panasonic and Equinor. I don't know, I really feel what the supplement
I think it's right. It's really about the total package of Hydro with all its competencies. And this is really when we meet with or when we are contacted by the kinds of Panasonic and others, they really look for the total industrial competence of Europe that our experience in going from R and D through piloting through industrial scale and then continuing to improve and improve forever, that's the kind of culture that they really like, and I think we have a lot to contribute with. So let's see where we end with the business case when we have matured it.
That's very helpful. Thanks very much.
Thank you. We will now take our next question. Please go ahead caller. Your line is open.
Good morning. Jatinder from Exane BNP Paribas. A couple of questions. Are you able to provide annual trajectory for this $2,000,000,000 commercial improvement as well, similar to what you've got for your improvement program? And just second question on recycling $3,500,000,000 to $5,000,000,000 CapEx.
Does that include any inorganic component as well because there were references to potential acquisitions to do few things within sorting and other processes? Will that come on top of that while that EBITDA uplift remains as communicated?
Perhaps I can answer the recycling and then I leave the commercial ambition follow-up to Paul. When it comes to recycling, we are pursuing opportunities both internally. We can scale our with our competence to do more than what we have done up to now. We it was mentioned of the Kekka, we have rebuilt Kego and that's the project that some of the projects that are in the pipeline. But we are also looking for opportunities in terms of M and A in order to increase the capacity.
And so in the guiding on the CapEx, it's both.
And when it comes to the commercial ambitions, Sjinder, I'm sorry, we don't provide annual guidance on this. This is market driven. And as you know, the foresight only into the Q1 is still limited for the majority of the industry. So we've rather set that a bit out in time based on a normalization of the market. The earlier that happens, the earlier we can deliver on the SEK 2,000,000,000, but committing to a figure only for 2021 is a bit challenging at current stage.
Okay, understood. And if I could ask one more question on your upstream growth. Elinorte, is 6.3 percent the new final number? Or would you consider expanding that capacity that you had to plan before embargo? And on tranbia aluminum as well, using those Carmoid technology components and expanding capacity elsewhere in the portfolio?
Is that still part of the plan and just suspended because of market or do you not envisage improving capacity in upstream business at all?
Well, when it comes to the last question, when it comes to the technology pilot, when we now start Husqvist, we do use several of the technology elements from the current technology pilot at Fusenet, which makes Fusenet more competitive in terms of cost and also in terms of footprint. And so we will not I do not foresee that we will build new smelters in the foreseeable future, but we will definitely use technology elements from this technology pilot in our sort of operational improvements as we go along. The first question was about Alunorte.
If you look at Alunorte, the ambition now is 6 point 3,000,000 tonnes. And then let's see when we stabilize at that level and also with the development we see in the market space, if there is further potential or not, and then we'll get back to it at such time. Okay.
Thank you so much.
Thank you. We will now take our next question. Please go ahead caller. Your line is open.
Hi guys. It's Amos Fletcher from Barclays here. A couple of questions. The first one was just asking around the potential sale of rolled products. It seems like there's maybe a bit of a delay.
I was wondering if you could discuss the dynamics sort of in favor or against a move on that front?
Yes. We are delayed and primarily due to the COVID situation, which has made the process being slower than what we expected and what we communicated last year. But we are now back to quite a good progress, and we will communicate the results of that process, hopefully not so far into the future.
Okay. And then second question was just around your new leverage target. So I was just wondering if you could help us define more precisely what is a level of surplus or where is the level of surplus capital for potential additional returns?
That will be an evaluation on a year by year basis. So the new balance sheet target is mainly or is fairly similar to what we had earlier. And basically, from maybe your own perspective, people have struggled a bit with funds from operations and progressing that exact definition. So we have moved to the underlying EBITDA, which is also a more common used metric in the marketplace. So there is not any difference in guidance around our balance sheet then.
So our policy remains as earlier. If we are able to uphold our balance sheet target, which is similar to what it was before, and we have excessive cash available, then we will evaluate that along with the growth opportunities that we've just discussed. And on a yearly basis suggest an allocation for dividend. So for planning purposes, you should still expect a minimum of SEK1.25 per share and then a minimum of 40% over the size of our net income.
Okay, understood. And then I guess final question was just to ask about I noticed the fact that you're excluding the CO2 compensation from the EBITDA targets, does that imply any kind of declining certainty on receiving those?
Not at all, Amos. It rather reflects the fact that we don't know what the exact value will be and giving a concrete figure there could also be misleading. So there's no change in a negative direction there and our discussions around potentials are still similar to what they've been earlier.
Okay, great. Thank you very much.
Thank you. We will now take our next question. Please go ahead. The line is open.
Hi. It's Dan from UBS again. I just had a quick follow-up on the cumulative improvement and commercial targets just to make sure getting the right number. Am I right that you've this the €8,500,000,000 improvement and the €2,000,000,000 commercial less the €4,100,000,000 you've already achieved. So on a look forward basis, it's $6,400,000 Is that the best way to think about it over the next 5 years?
And then on top of that, you would have, to Amos' point, the carbon compensation that I think you provided guidance of €500,000,000 to €1,500,000,000 Can you remind us on that guidance? Thanks.
Yes. No, I think your initial reflections is correct. We these are 2 separate ambitions and the SEK 4,100,000,000 does not eat out of the SEK 2,000,000,000. When it comes to the CO2 conversation, we haven't given any guidance. What we've referred to is the different analysts' expectations of what this could mean.
Last time or a while ago, I think it ranged from €500,000,000 to €1,500,000,000 depending a bit if you use a net or growth figure also. After we've seen that more people have spending time of this, I think the range has narrowed to around €500,000,000 to €100,000,000 in net improvements on the CO2 compensation side using the market prices we see now and also the different factors which have been discussed. So we it's still uncertain exactly where the figure lands and it's dependent on prices. But I would say that most people expect somewhere between €500,000,000 and €1,000,000,000 in OpEx.
Okay, great. So it's all up sort of €7,000,000,000 to €7,500,000,000 of bottom up EBITDA improvement? Is that the sort of number we're looking at? Okay.
And then you also are aware of that in the downstream business areas, we have guided for cost inflation, which you should, of course, take into account from a modeling perspective, whereas for the upstream areas, we've not adjusted the LME price in the margin assumptions. So we've expected the similar margins. So the inflation on the cost side should be offset by the inflation on the income side. But of course, if our peers improve a lot over the same period, then they can eat into the DAS margin, but then reflections are great.
Okay, thanks. And then just second follow-up question. Guess, us analysts are never happy with the way that you present stuff and you used to do stuff on EBIT and now you're focusing on EBITDA. But when I look at the recycling or battery related projections of EBITDA improvement versus CapEx, can you give us any guidance on what sustaining CapEx or depreciation would be so we can sort of provide a ballpark on the return on capital on those investments? So on the recycling, for example, if you took the midpoint of the range, dollars 1,250,000,000 of EBITDA, how would that drop down to EBIT?
And what would the sustaining sort of CapEx number be?
I'm sorry, at current stage, this is an ambition level, of course, backed by certain hypotheses around projects, but figures are so immature and need to be developed further. So giving a more detailed guidance than what we've given to the market at current stage, we are not able to.
All right. Thanks a lot.
Thank you. We will now take our next question. Please go ahead. The line is open.
Hi. This is Ioannis from Morgan Stanley again. Just a couple of questions here left. The first one on anti dumping, both in terms of extruded and rolled products. Can you talk about what you're seeing in the market?
Because you talked about volumes for next year and volume development, but how much market share gain are you baking in for 2021 across both segments? And secondly, just on working capital, you mentioned some reversal in the very good performance, both due to price and volume in Q4. How should we think about the 2021 on a sort of spot to spot scenario? How could working capital develop over the next 12 months? Thank you.
Okay. Starting with the antidumping. And let me just first point out that what we basically have seen is that these are the products in the low margin segments. And this is a segment where we do not compete actively. So we have not built in any market share increase because of that.
But we see that this basically creates a stronger floor in the market that lifts the whole market. So that's the improvement that we're seeing.
And the second question was on working capital, yes. I think giving a guidance for next year is still a bit challenging, unfortunately, because we see that we are still a bit uncertain around the volume situation, the pricing situation and the lag effect. So saying more than that, we will probably see an increase in absolute levels due to volumes and prices coming up and the reduction in the amount of days due to this being further aligned with revenues is all the guidance we have at current stage.
Okay. That's very clear. And so just a follow-up on the antidumping question. I guess Xtru that is better positioned from product mix point of view, but the third world products was more exposed to input pressure, especially around foil. So could you possibly elaborate here a bit?
Yes, that is the case. We are better positioned or this will we could be more positive for the roles given that this is impacting markets, which we are quite exposed to. As you know, the oil market has been quite challenging over the latter years. So this could be an additional upside on pop up just moving with the market.
Understood. Thanks very much.
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