Norsk Hydro warns 2Q EBIT will fall to 1.6 billion kroner due to higher costs

OSLO, Norway: Shares in Norsk Hydro ASA plunged on Monday after the Norwegian aluminum and power generation group said earnings in the second quarter would be hurt by higher costs. The Oslo-based group said it expects to report underlying earnings before interest and tax of around 1.6 billion kroner (US$316.6 million) in the second quarter, down from 2 billion kroner in the first quarter. Norsk Hydro shares fell by 12 percent to 66 kroner (US$13.06) in Oslo. The company said that although it has realized a higher aluminum price during the quarter, it has seen significant cost increases in its Aluminum Metal business area. The cost increases are mainly related to aluminum prices, aluminum freight, petroleum coke and other costs, Norsk Hydro said. It also said the lower spot price for electricity in Norway will hurt the results in the energy business and that increased forward prices for coal and aluminum, related to its long-term power sourcing contracts, will have a significant negative effect on earnings. However, it said the Aluminum Products business area will deliver a strong result. Norsk Hydro will publish its second quarter results on July 22. Source: International Herald Tribune