Norsk Hydro falls on lower profits

Norsk Hydro, Europe's second-largest aluminium producer, yesterday reported sharply lower profits and warned of worsening market conditions as the global financial crisis began to affect its key customers. Aluminium prices peaked in July but have plunged since as struggling hedge funds liquidate positions and the automotive and construction industries cut demand amid growing fears of recession. Three-month prices fell from $3,380 per tonne to $2,425 at the end of the third quarter and are now about $2,110. Also, high input costs, primarily energy, have squeezed margins and made an estimated one-quarter of world capacity unprofitable. Norsk Hydro's underlying net income from continuing operations halved to Nkr968m ($141m) on flat revenue of Nkr21.77bn. The company's shares fell sharply in Oslo, closing down 12 per cent at Nkr27. Norsk Hydro forecast that primary aluminium consumption would increase by 5 per cent this year, down from its previous forecast of 8 per cent, and that it would slow further in 2009. ---FT.com