Norsk Hydro earnings down but board remains confident

Norsk Hydro posted a trading update on Tuesday, with underlying earnings before financial items and tax declining to NOK 1.48bn in the period, down from NOK 1,62bn in the second quarter.

The firm said the decrease mainly reflected seasonally lower metal sales and negative currency effects, partly offset by higher realized aluminium prices.

During the period, Norsk Hydro said it had a record-high alumina production of 6.5 million mt, though it also claimed seasonally lower metal sales.

Trial production started at new automotive line in Germany, it said, with its ‘better improvement programme’ on track for a 2019 target of NOK 2.9bn.

Global primary aluminium demand growth is expected at 4-5% in 2016, Norsk’s board said.

“Demand growth for aluminium remains healthy,” said Norsk Hydro president and CEO Svein Richard Brandtzæg.

“We are sticking to our forecast for global aluminium demand growth of 4-5% for 2016 and expect to land in the higher range of this estimate for the full year.£

Brandtzæg said that was on the back of higher-than-expected demand in China and slower restarts of curtailed capacity.

“I'm pleased to see the positive operational development in our bauxite and alumina production.

“Both Paragominas and Alunorte produced above nameplate capacity in the third quarter, with Hydro Alunorte alumina production reaching a record-high production level,” he explained.

Brandtzæg said that was a demonstration of long-term dedication by a “highly competent and committed” organisation in Brazil.

“We have succeeded in lifting the bar and will continue these efforts to stabilize production at or above nameplate capacity," says Brandtzæg.”