Hydro earnings rise unexpectedly on market recovery, cost
Adds analyst, detail
OSLO, Oct 23 (Reuters) - Norwegian aluminium maker Norsk Hydro NHY.OL posted a surprise rise in third-quarter operating profits on Friday and said its markets were recovering from the fall in demand seen in the second quarter.
Its Extruded unit, which makes products for construction and other industry, saw a faster than expected recovery, especially in Europe, and was boosted by lower raw material costs and fixed costs as well as positive currency effects, Hydro said.
"This is a strong result driven primarily by the downstream extruded business," Credit Suisse said in a note. "With the beat in that division on costs rather than volumes in Q3, this certainly offers green shoots for a recovery into 2021 as volumes continue to improve."
Underlying earnings before interest and tax (EBIT) rose to 1.41 billion Norwegian crowns ($152 million) in the July to September period, from 1.37 billion crowns a year earlier, beating the 278 million crowns expected in a poll of analysts.
The quarterly result was also positively impacted by an insurance payment of 192 million crowns this year following a 2019 cyberattack as well as 64 million crowns in government grants.
Hydro said the global recovery from the impact of the coronavirus is reducing oversupply of aluminium, which is used in a range of products and applications such as construction, cars and soda cans.
While aluminium prices have recovered from the four-year lows hit in March, shares in Norsk Hydro are still down 20% since the start of the year.
($1 = 9.2730 Norwegian crowns)
(Reporting by Terje Solsvik and Victoria Klesty; Editing by Christian Schmollinger)
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