Hydro Posts Surprise Loss on Currency Charge, Lower Metal Prices
The net loss was 637 million kroner ($106 million) after a loss of 1.6 billion kroner a year earlier, Hydro said today in a statement. That missed the average estimate of 52 million krone in profit among three analysts surveyed by Bloomberg. Sales slid 4.6 percent to 16.1 billion kroner. Hydro recorded a net foreign currency loss of 1.3 billion kroner, according to the statement.
It fell 0.3 percent to 25.48 kroner by 10:22 a.m. in Oslo.
Hydro, competing with United Co. Rusal and Rio Tinto Alcan Inc., is cutting costs and capacity after aluminum prices slid about 35 percent from a May 2011 peak. Curbing global output, with Alcoa Inc. also closing 149,000 metric tons of smelting production this year, will help to bring supply nearer demand.
“Although the global macroeconomic situation remains challenging, aluminium demand is expected to continue to show solid growth this year,” Hydro Chief Executive Officer Svein Richard Brandtzaeg said in the statement. “Hydro maintains its outlook for a balanced aluminium supply and demand in 2013.”
Aluminum prices fell 11 percent to average $1,926 in the quarter, while Hydro booked a foreign-exchange loss on external U.S. dollar debt and currency balances in euros and dollars.
Hydro, which expects global demand outside China to grow 2 percent to 4 percent this year, said it sold forward about half of its primary production for the third quarter at about $1,850 a ton excluding volumes from its Qatalum joint venture in Qatar.
Production of primary aluminum fell 4 percent to 483,000 tons and Alumina output slid 16 percent to 1.25 million tons. Hydro’s net debt was 1.3 billion kroner at the quarter’s end.
Hydro on June 12 declared force majeure on deliveries from its Alunorte alumina refinery in Brazil after a power failure. Force majeure is a legal clause allowing companies to miss deliveries because of circumstances beyond their control.
Hydro is working to clean up tanks affected by the failure and is seeking to restart production as soon as possible, said Brandtzaeg on a conference call today. The disruption will affect third-quarter production, he said.
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