Norsk Hydro Falls Most in 4 Months After Profit Misses Estimates

Norsk Hydro ASA, whose chief executive officer yesterday announced plans to leave the aluminum maker, fell the most in more than four months in Oslo trading after second-quarter profit missed analyst estimates.

The shares slumped as much as 3.8 percent, the biggest decline since March 3, and were trading at 35.83 kroner, down 1.8 percent, at 10:54 a.m. local time. Net income was 185 million kroner ($30 million), less than half the 378.5 million-kroner average estimate of four analysts surveyed by Bloomberg. The Oslo-based company reported a loss of 637 million kroner last year.

Seasonally lower prices and output from its hydroelectric business weighed on underlying results, while this was partly offset by higher metals prices, the company said in a statement today. Global demand for aluminum, excluding China, rose 4 percent in the quarter from a year earlier. Consumption rose to 27.5 million metric tons, while production was 26 million tons.

Norsk Hydro has been cutting high-cost primary smelting operations as aluminum prices declined to a five-year low in February. The company is investing to increase production of alloys used to make goods from computers and smartphones to lightweight cars. It’s spending 130 million euros to expand capacity fourfold to 200,000 tons a year at its Grevenbroich plant in Germany to meet demand from carmakers.

CEO Svein Richard Brandtzaeg yesterday resigned and will take up the same post at Yara International ASA, a Norwegian nitrogen-fertilizer producer, in February at the latest. He’ll remain CEO while Norsk Hydro searches for a replacement.

Record Premiums

The company has sold forward about half its primary aluminum production for the third quarter for about $1,825 a ton, it said. The sale excludes volumes from Qatalum, its joint venture in Qatar. Underlying earnings declined to 544 million kroner from 772 million kroner in the previous three months.

Aluminum prices at the London Metal Exchange ranged from $1,750 to $1,900 a ton, Hydro said. “Prices in Europe, including duty paid standard ingot premium, were at a level of $2,150 to $2,300 per metric ton for the quarter,” it said. Premiums added to the LME benchmark price to obtain metal in Europe, North America and Asia climbed to records this year.

The premiums and efforts to diversify alloy production are helping the company to cope with a slump in aluminum prices that saw the commodity decline to $1,677 a ton in February, the lowest level since July 2009.

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