Profits shine at major metals firm

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Norsk Hydro, one of Norway’s largest and traditionally most important international firms, could finally report some good news after months of restructuring and downsizing. Its half-year profits soared from just NOK 2 million last year to NOK 1.5 billion this year.

Despite Hydro's improved finances, its CEO still thinks costs are too high at Norwegian plants like the one here at Sunndal. More work reductions are under consideration. PHOTO: Norsk Hydro

“The world has gotten on the right track,” Hydro’s chief executive Svein Richard Brandtzæg, told financial website dn.no after releasing strong second-quarter earnings. “In some areas it’s moving forward very quickly.”

Brandtzæg has reason to smile. As head of the world’s third-largest aluminum producer, he can clearly see business improving. Demand is way up for Hydro’s products, meaning prices are up as well. They fell sharply when the global finance crisis set in at the end of 2008, but now they’ve recovering.

There’s still over-capacity in the aluminum business and prices haven’t returned to the levels seen before the crisis started, but the trend is positive.

“Hydro made cuts quite early,” Brandtzæg told dn.no. “We did our job there.” Sales of other products are up as much as 24 percent compared to last year.

He’s getting reports from Hydro plants all over the world that development is positive. “In Germany there’s been a considerable increase (in demand) and in the US we’re seeing that the market is also on the right track, if slower,” Brandtzæg said.

Hydro’s cost-cutting program will continue, though, and Brandtzæg still thinks costs are too high at Hydro’s Norwegian plants in Sunndal, Årdal, Høyanger, Husnes and Karmøy, not least because of unfavorable currency exchange rates. He wouldn’t rule out more worker furloughs or layoffs.

Hydro’s operating result came in at NOK 1.1 billion for the second quarter, higher than analyst estimates of NOK 995 million. The profits compared to a loss of NOK 618 million in the same quarter last year, and were attributed to higher sales volume, good margins and strict cost control.

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