Norsk Hydro second quarter profits down 87 percent

Aluminum and energy group Norsk Hydro ASA on Tuesday said its profits dropped 87 percent in the second quarter on falling sales and higher costs.

Net profit was 786 million kroner (US$155 million), down from 5.95 billion kroner in the same quarter last year.

Sales dropped 4 percent to 23.98 billion kroner (US$4.72 billion), from 25.04 billion kroner in the second quarter of 2007.

The year-ago figure excludes 2007 quarter profits from its oil unit, which was taken over by Norway's government-controlled Statoil ASA in October to form StatoilHydro ASA.

Hydro shares, which had dropped about 25 percent in the past month, were down slightly at 62.70 kroner (US$12.35) in Oslo after the report.

Hydro, which had issued a profit warning earlier this month, citing cost increases, blamed the drop on the weakening U.S. dollar and higher input costs in the aluminum industry. It said the higher costs more than offset the positive effect of higher aluminum prices.

"Hydro experienced a drop in its second-quarter results due to the rising input costs affecting the entire industry," CEO Eivind Reiten said. "While these pressures will likely remain for some time we continue to show strong operational performance."

Lower spot prices for electricity in Norway also negatively affected Hydro's energy unit during the quarter.

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On the Net:

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