Two percent increase in second-quarter net profit, boosted by high aluminum and oil prices, was reported by oil and gas company Norsk Hydro ASA. The company also said the sale of its oil division to Statoil ASA is on track.
Norsk Hydro said its net profit for the three months ended June 30 came to 5.95 billion kroner (EUR752.4 million; US$1.04 billion), up from 5.83 billion in the same quarter in 2006, beating analysts' forecasts.
Revenue fell to 46.53 billion kroner (EUR5.88 billion; US$8.13 billion) from 48.03 billion kroner a year earlier.
The aluminum operations, Norsk Hydro's core business after agreeing to sell its oil and gas activities to Statoil, had their strongest first-half results ever, the Oslo-based company said, adding that the Statoil deal is expected to be completed on Oct. 1.
Last December, Norsk Hydro agreed to sell its oil division to Norway's state-controlled oil company and instead become a pure aluminum and power generation company.
Norsk Hydro Chief Executive Eivind Reiten said the results announced Tuesday give the company "a solid basis to grow as a global aluminum company."
Norsk Hydro shares rose 0.3 percent to 239.5 kroner (Ђ30.30; US$41.88) in Oslo.
The company's second-quarter average oil and gas production came to 558,000 barrels of oil equivalent a day, down from 52,000 barrels in the first quarter, which it blamed on planned maintenance and temporary shutdowns. Oil equivalents measure energy content, rather than volume, of oil and gas.
Morten Normann, an analyst at Kaupthing Bank in Norway, said the result was better than expected.
"The happy days are here again," he said, adding all units showed good performance and that Norsk Hydro is handling its costs better than the market had hoped for.
In its outlook, the company said oil prices are expected to stay high but that scheduled shutdowns on the Norwegian Continental Shelf will hurt oil production in the third quarter.
Exploration activity will also stay high throughout the year, and some 50 wells are planned to be spudded, or the process in which the well is drilled to meet the seabottom.
Thanks to increased smelter capacity utilization in China, Norsk Hydro said its production in China is expected to rise by about 30 percent this year compared with 2006, while production in the rest of the world is estimated to grow by about 5.5 percent.
Global aluminum production growth is expected to come to about 12 percent or 13 percent in 2007, while the global aluminum consumption is forecast to grow at a slightly lower rate.
Norsk Hydro employs about 33,000 people in 40 countries.
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