Aluminium producer Norsk Hydro’s Q2 core profit falls below expectations
July 23 (Reuters) – Norwegian aluminium producer Norsk Hydro (NHY.OL), opens new tab posted on Tuesday an 18% fall in second-quarter core profit to 5.84 billion Norwegian crowns ($533.09 million), despite higher alumina prices, as lower volumes and margins weighed.
The adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the quarter ended June 30 were below an average analyst forecast, opens new tab of 6.15 billion crowns.
The company said its bauxite and alumina division reported stronger results due to higher alumina prices and sales volumes, while its energy segment posted a decline in earnings due to reduced production and lower prices.
Aluminium prices have dropped this year as China has ramped up its production to nearly a decade high, but lower inflation and better prospects for global economic growth are expected to boost European producers.
Hydro said it grappled with weakened demand in Europe’s residential construction, a shortage in aluminium scrap and a slowdown automotive extrusion tied to electric vehicle (EV) production.
The termination of EV subsidies in Germany as part of a last-minute 2024 budget deal has led to a downturn in the company’s European aluminium volumes.
“We are mitigating the challenges of a weak downstream market by executing cost-saving measures and maintaining extrusion margins,” recently appointed CEO Eivind Kallevik said in a statement, opens new tab.
Aluminium prices have also fallen in recent years due to waning demand, after soaring in 2021 and early 2022 to around $3,500 per ton as the global economy rebounded from the pandemic.
($1 = 10.9549 Norwegian crowns)
Source from Reuters: https://www.reuters.com/markets/commodities/aluminium-producer-norsk-hydros-q2-core-profit-falls-below-expectations-2024-07-23/