Norsk Hydro core profit rises slightly more than expected
Adjusted EBITDA 7.37 bln crowns, slightly ahead of expectations
Extrusions volumes fall, especially in North America and Europe
Shares rise 1.6% in early trade
Adds share move in paragraph 10, analyst comments in paragraphs 11-12
By Jesus Calero
Oct 24 (Reuters) -Norwegian aluminium producer Norsk Hydro NHY.OL reported a slightly bigger-than-expected rise in its third-quarter core profit on Thursday, supported by higher aluminium and alumina prices, lower raw material costs and positive currency effects.
Aluminium makers like Norsk Hydro are well positioned for growth fuelled by rising demand for low-carbon products and elevated prices, while Chinese alumina prices remain high due to bauxite sourcing challenges.
Alumina, a key material derived from bauxite, is refined to produce aluminium, the lightweight metal used in everything from cars to beverage cans.
The Platts Alumina Index (PAX) gradually increased to $562 per tonne by the quarter-end as global alumina supply tightened.
Norsk Hydro's adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 89% from a year earlier to 7.37 billion crowns ($672.12 million) in the July-September quarter.
Analysts on average had expected a profit of 7.26 billion crowns, according to a company-compiled consensus.
"The positive development in our upstream revenue drivers continued in the third quarter... countering the overall effects of the challenging downstream market," CEO Eivind Kallevik said in a statement.
Meanwhile, extrusions volumes declined, especially in North America and Europe due to weak demand in automotive and construction sectors, tempering the company's growth.
Norsk Hydro's European aluminium volumes have fallen this year due to lower electric vehicle production, stemming from Germany's unexpected termination of EV subsidies earlier this year and the looming EU tariffs on Chinese imports.
Shares of the company were up 1.6% in early trade, outperforming a 0.5% rise in the STOXX 600 index .STOXX.
Norsk Hydro delivered solid results, though weaker fourth-quarter guidance reflects ongoing challenges in the extrusions market and higher fixed costs, J.P. Morgan analysts said.
Barclays highlighted potential upside from stronger-than-expected alumina pricing going into the fourth quarter.
($1 = 10.9653 Norwegian crowns)
Reporting by Jesus Calero; Editing by Subhranshu Sahu
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