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Aluminium producer Norsk Hydro lags profit forecast in 4th quarter

Norsk Hydro, a Norwegian aluminium manufacturer, missed its fourth quarter profit expectation on Friday. Higher costs and weaker downstream demand were only partially offset by high alumina and aluminum prices and positive exchange rates.

The adjusted earnings before taxes, depreciation, and amortization more than doubled in the fourth quarter of 2024 to 7,70 billion Norwegian crowns (690.5 million dollars). However, this was below analysts' expectations of 8,28 billion crowns.

The 25% tariffs imposed by President Donald Trump on steel and aluminum are increasing U.S. prices, exposing the production gap at home and creating a possible cost increase for producers of aluminium like Hydro that rely on imported products to meet U.S. demands.

Hydro stated that "as the U.S. imports a lot of aluminium, tariffs are likely to increase premiums and cost, with Midwest premiums having already risen to their highest level since April 2023."

Since last Friday, the U.S. premium on aluminium over the benchmark global price at the London Metal Exchange has risen by a quarter to 35 cents a pound. It has risen by 60% since Trump's election.

Hydro's Extrusions division was not affected by tariffs as it relies mostly on domestic raw material and passes on higher LME premiums and prices to its customers.

It said that the company is continuing to evaluate and take mitigation measures for trade flows exposed across the U.S.-Mexico border.

Hydro said that it also expected the underlying demand for electricity to improve gradually into 2025, driven by lower interest rate. (1 dollar = 11,1511 Norwegian crowns). (Reporting and editing by Milla Nissi in Gdansk)

(source: Reuters)