OSLO – Norwegian metals producer Norsk Hydro warned it will miss its 2019 savings targets after falling well short of fourth-quarter earnings expectations hit by restricted output in Brazil and higher costs.
Underlying operating profit fell 85% to 534-million Norwegian crowns ($62.48-million) versus the 1.45-billion crowns expected by analysts in a Reuters poll.
"Our results are reflecting the challenging situation we face in Brazil and higher raw material costs," CEO Svein Richard Brandtzaeg said in a statement.
Despite making some progress it said it remained uncertain on when its Alunorte alumina facility in Brazil, the world's largest, might return to full output.
It has been operating at half capacity following a spill of untreated water in February.
Last month, the Brazilian state of Para lifted its restrictions, but full production at Alunorte can only resume once a federal court follows suit.
Alunorte is a key supplier to Hydro's metal smelters.
"We continue to seek a common agreed solution, so operations can be resumed," the company said . "The timing of a full resumption of operations remains uncertain."
The restrictions in Brazil along with higher raw material costs hurt profits during the quarter, the company said, adding it would not meet cost-cut targets in 2019 after missing a savings goal of 500-million crowns for 2018.
The company's board proposed a dividend of 1.25 crowns per share for 2018, down from 1.75 crowns for 2017 and short of the 1.58 crowns expected by analysts on average.
It also forecast a lack of supply in the global aluminium market but said an uncertain economic outlook could sap demand in the coming year.
"For 2019, we expect the global primary aluminium market to be in deficit, although increasing macro uncertainty could lead to softening demand growth," Brandtzaeg said.