Norsk Hydro Profit More Than Doubles, Boosted by Surging Aluminum Prices

Norsk Hydro ASA, Europe’s third- largest aluminum maker, said second-quarter profit more than doubled after prices for the metal surged 50 percent.

Net income jumped to 503 million kroner ($82 million) from 211 million kroner a year earlier, Hydro said in a statement today. Sales rose 12 percent 19.8 billion kroner.

“We will raise our estimates on the back of this report,” Samir Bendriss, head of research at Pareto Securities ASA in Oslo, wrote in a note today. “The stock should move up.”

The company rose 1 percent to 35.30 kroner by 10:18 a.m. in Oslo trading. Realized aluminum prices in the quarter averaged $2,200 a metric ton, up from $1,468 a year earlier, it said.

Hydro is seeking to boost profit margins by cutting power costs after slashing output 26 percent last year on increased electricity charges and weakening demand. The company will spend 260 million kroner building an aluminum recycling plant that uses 5 percent of the energy needed for a regular smelter. Rising global output will exceed demand this year, it said.

The aluminum maker hedged most of its production until the end of 2011 at a price of $2,400 a ton, the company said.

Hydro has sold forward “substantially all of its primary” aluminum production for the third quarter at about $2,175 per ton, excluding production from Qatalum, its joint venture unit in Qatar, it said. Qatalum reached 48 percent of its full production capacity at the end of June, the company said.

Hydro forecasts earnings from alumina and raw materials businesses to fall in the second half on lower prices.

The second quarter profit missed the 602.1 million-krone average of seven analyst estimates Bloomberg compiled.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net

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