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Investing.com -- Norsk Hydro (OL:NHY) posted a 33.4% increase in second-quarter underlying earnings, supported by stronger aluminium and energy prices. The gains came despite ongoing cost pressures from higher raw material costs, particularly alumina, and currency headwinds.
Shares rose around 3% in early trading in Oslo following the results.
Adjusted EBITDA rose to 7.79 billion Norwegian crowns in the April–June period, up from 5.84 billion a year ago and ahead of the 7.30 billion expected by analysts, according to company-compiled estimates.
The company said some business segments showed early signs of improvement in order bookings, notably among domestic producers benefiting from a decline in imports.
Despite ongoing weakness in the bauxite and alumina and aluminium metal units, analysts noted that the so-called “other and eliminations” segment helped lift overall performance.
Hydro also announced a cut to its 2025 capital expenditure forecast by 1.5 billion crowns, bringing it down to 13.5 billion.
"I am pleased with the strong results this quarter, as the global market uncertainty is continuing,” said Eivind Kallevik, President and CEO of Hydro. “Hydro is taking proactive measures to reinforce our long-term resilience and operational efficiency.”
At the same time, the company paused external white-collar hiring in response to volatile input costs and ongoing uncertainty around demand linked to U.S. tariffs.
“We have so far not seen big changes to our operations from tariffs and potential trade wars. Our main concern is whether the uncertainty will lead to a global economic downturn,” added Kallevik.
Norsk Hydro shares have gained 15% over the past three months, supported by a rebound in aluminium prices.
Despite the recent re-rating, the stock still trades at a discount to peers across key valuation metrics, including P/NAV, EV/EBITDA, and free cash flow yield, according to RBC Capital Markets analysts.
“The outlook for aluminium remains uncertain, but we see risk reward attractive at these levels considering NHY defensiveness and its exposure to the European stimulus story,” the analysts wrote.