Norwegian industrial firm Norsk Hydro was ending the week in a slump, after new taxes imposed on its Brazilian operations scared off investors. The company lost fully 4.3 percent of its value on Wednesday and was still in the dumps on Friday.
The steep fall was linked entirely to new tax bills in Brazil that are expected to cost the company around NOK 680 million, or well over USD 100 million. The higher taxes are being imposed on heating oil, which is used in Hydro’s alumina plant in Brazil, and on electricity.
Analysts told newspaper Dagens Næringsliv (DN) that the market did not overreact to the taxes, claiming that they simply will cut Hydro’s profitability. Hydro’s management wasn’t blamed for the tax hike: “They have nothing to do with what the Brazilian authorities do with taxes,” Hans-Erik Jacobsen, an analyst at Swedbank First Securities, told DN, adding that the new taxes were “wholly unexpected.”
A Hydro spokesman said the company was “worried” about how the sudden change in the tax law will hit its operations in the state of Pará, and would try to get the taxes reversed.