News of more job cuts at industrial firm Norsk Hydro sent the Oslo stock exchange into another slump late this week. Hydro warned that as many as 300 workers may lose their jobs as the company cuts costs to offset a dive in aluminum prices.
Shares on the Oslo Stock Exchange plummeted, Hydro’s alone by more than 8 percent, after the company announced cost cuts that were even greater than analysts had expected. Hydro is viewed as one of the “locomotives” among Norwegian stocks, and its hard times hit other firms as well.
Aluminum now accounts for the lion’s share of Hydro’s business, after the company spun off its fertilizer business in 2004 and sold off its oil and offshore interests a few years later. A global collapse in aluminum prices in recent months is hitting the company hard.
Management’s response on Thursday was the plan to cut costs by as much as NOK 800 million (about USD 114 million) during the next year. The cost-cutting will likely eliminate 250 to 300 jobs, meaning around every third staff and support position will disappear. Around 40 percent of the job cuts will be made by letting consultants go, many at the company’s Oslo headquarters.
Hydro earlier had announced it would cut aluminum production by 23 percent, a move that will eliminate 900 jobs. The company, one of Norway’s largest multi-nationals, currently employs around 23,000 people in 40 countries.
One analyst called the cost-cutting “impressively high.” Oddvar Bjørgen of securities firm ABG Sundal Collier told newspaper Dagens Næringsliv that he had expected cost cuts of NOK 500 million. The planned cuts of up to NOK 800 million “must be necessary in today’s economic situation,” Bjørgen said.
A worldwide construction slump has dramatically reduced demand for aluminum. More cuts loom if markets fail to improve, a Hydro spokesman confirmed.
Hydro’s stock fell to NOK 20.80 per share after the cuts were announced. It led the exchange into a collective dive that wiped out gains made the day before after slumps earlier in the week. At one point, the main index of the Oslo Stock Exchange fell below the 200 mark, adding to market gloom.
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