Aluminum maker Hydro warns of rising costs after record first-quarter profit

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A production line under construction at a casting house at Norsk Hydro’s aluminum plant in Karmoey, Norway, April 26, 2019. REUTERS/Gwladys Fouche/Files

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OSLO, May 3 (Reuters) – Norwegian aluminum maker Norsk Hydro (NHY.OL) reported record quarterly profits on Tuesday that beat expectations, but also warned of rising costs ahead due to inflation and logistical disruptions, affecting its actions.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) more than doubled to 11.2 billion crowns ($1.19 billion) in the January-March quarter, from 5.2 billion a year ago. a year. Analysts on average expected 10.6 billion.

“The Russian invasion of Ukraine, continued global supply chain shortages, high energy prices and inflation concerns continue to add to the uncertainty,” Hydro said in a statement. communicated.

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The company’s shares were down 4.6% at 0756 GMT, underperforming a 0.3% drop in the benchmark Norwegian stock index, but are still up 6.8% since the start of the month. ‘year.

“While we believe strong results are clearly positive, the move in underlying cost and cash flow inflation will likely be viewed as a cautious development by the market,” Citi analysts wrote in a statement. note to customers.

First-quarter revenue rose 46% year-on-year to 46.6 billion crowns, below the 49.0 billion average forecast by 13 analysts in a survey compiled by the company.

Hydro’s Metal unit, which produces primary aluminum and is the company’s largest profit center, will see raw material costs rise in the second quarter, as will the bauxite and alumina division, the company said. society.

Hydro Metals Markets, a major recycling and trading unit, meanwhile expects volatile conditions in the second quarter, while the group’s power generation unit will see output fall due to a lack of rain in hydroelectric reservoirs.

Aluminum prices on the London Metal Exchange rose sharply in the first quarter, reaching record highs above $4,000 a tonne, but have since fallen to end April at just over $3,000. . Read more

Global demand for the light metal is still expected to outpace production for a second consecutive year, Hydro said, which could lead to lower global aluminum inventories.

($1 = 9.4207 Norwegian kroner)

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Reporting by Gwladys Fouche Editing by Terje Solsvik and Mark Potter

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