Norsk Hydro earnings more than double as recovery boosts aluminium demand

OSLO (Reuters) -Norwegian aluminium maker Norsk Hydro reported a sharp jump in second-quarter core profit on Friday that beat expectations, as global economic recovery supported increased demand for the metal.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for April to June more than doubled year-on-year to 6.6 billion crowns ($745.70 million), beating the average consensus estimate of 6.09 billion crowns in a poll of analysts.

“It’s a strong result and actually the best quarterly results we have had since becoming a pure play aluminium company back in 2007,” Chief Financial Office Paal Kildemo said.

Both the aluminium metal and extrusion divisions reported record earnings.

Rising aluminium prices had been a key driver in the earnings recovery, Kildemo said.

During the quarter, the cash price for aluminium on the London Metal Exchange traded at its highest level in close to a decade, with the strong demand dynamics lifting premiums, Norsk Hydro said.

The price of aluminium rose by two-thirds from the lows hit in the second quarter of 2020 to around $2,500 a tonne by the end of June this year, aided by the global economic recovery.

“We currently don’t see any indications of the markets moving down again,” Kildemo said.

All operations were running at full production, he added.

Norsk Hydro returned its Norwegian Husnes aluminium plant to full capacity of 195,000 tonnes a year in the second quarter after it had been curtailed since 2009.

Hydro’s earnings also benefited from better results from its energy division, but higher raw material costs upstream and negative currency effects offset some gains, Norsk Hydro said.

Hydro’s share price, which has doubled since July last year, rose as much as 2.4% on Friday morning and were up 0.7% at 1013 GMT.

($1=8.8507 Norwegian crowns)

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