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Skanska blames profit drop on eurozone

Swedish builder Skanska posted on Thursday a 23-percent fall in third-quarter net profit as economic uncertainty in Europe weighed on results, but said demand in the US market was picking up.

Published: 8 November 2012 11:25 CET

In the July-September period, Skanska reported a net profit of 1.0 billion kronor ($149 million), compared with 1.28 billion kronor in the corresponding period last year. Analysts polled by Dow Jones Newswires had expected a net profit of 1.1 billion.

Revenue rose 4 percent to 33.3 billion kronor, slightly above expectations of 33.2 billion.

Activity in the first nine months of the year and the long-term order situation were “stable”, chief executive Johan Karlström said. However, third-quarter orders had been weak, especially in Europe, he said.

“A growing number of signs indicate that also the Nordic economies are being increasingly impacted by the fall-off in global demand, mainly due to the situation in the eurozone,” he said in a statement.

By contrast, an improvement in the US market was becoming increasingly clear, with many projects available for tender, he added.

In the Nordic region, the housing market had been affected by the economic situation in Europe, but Karlström said he saw “favourable” demand for residential property in the long term.

Shares in Skanska were down by 0.78 percent on the Stockholm stock exchange at at 9:51 on Thursday morning, in a market that was 0.47 percent higher.

AFP/The Local/og

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PROFITS

Norsk hydro profits jump despite Brazil scandal

A surge in aluminium prices helped Norwegian metals and energy giant Norsk Hydro to rising profits, figures released on Wednesday showed, though an environmental scandal in Brazil threatens to dull its shiny outlook

Published: 26 April 2018 10:48 CEST
Norsk hydro profits jump despite Brazil scandal
Hydro President and CEO Svein Richard Brandtzæg visits the Alunorte alumina refinery in Barcarena, Brazil, in March 2018. Photo: Hydro
The company's net profit jumped 19 percent for the first quarter to nearly 2.1 billion Norwegian kroner ($265 million, 217 million euros), as sales surged 75 percent year-on-year to nearly 40 billion kroner.
   
Operating profits, or earnings before interest and taxes,  rose 38 percent year-on-year to 3.15 billion kroner, but shrank 11 percent from the last quarter of 2017.
   
The steep decline follows a scandal that erupted after Norsk Hydro was accused of contaminating a river in Brazil with bauxite residue. The company has said it found no evidence of such a spill, but has apologised for discharging untreated rainwater into the Para River.
   
Investors reacted coolly to the earnings report, pulling Norsk Hydro's share price down by 1.1 percent in early Wednesday trading. It later recovered some of that ground to trade down 0.3 percent in the afternoon.
   
Brazilian authorities slapped Norsk Hydro with two fines of 10 million reais (2.5 million euros, around $3 million) each and ordered the giant to halve its production at Alunorte, the world's largest aluminium plant, and also suspend the use of the river basin.
   
As a result, Norsk Hydro's earnings before interest and tax for its bauxite and alumina activity plunged 60 percent from the last quarter, to 741 million kroner.
 
As alumina is the main component of aluminium, the drop threatens to put a strain on the whole of Norsk Hydro's supply chain.
 
Norsk Hydro is currently in talks with the Brazilian authorities but it does not know when it will be allowed to operate at full capacity at the Alunorte plant again.
   
The saving grace for the Norwegian company in the first quarter was a surge in aluminium prices. 
   
The jump was then consolidated after the United States slapped Russian metals giant Rusal with sanctions earlier this month.
   
But global prices are now beginning to dip once again, after the US Treasury on Monday said it would lift its sanctions on Rusal if tycoon Oleg Deripaska gives up control of the company.
   
“The US sanctions on Rusal have caused great uncertainty in the world's aluminium markets and will impact trade flows and availability of metal and raw materials throughout the aluminium value chain,” CEO Svein Richard 
Brandtzaeg said in a statement from Hydro Norsk Wednesday.
   
“The Brazilian authorities' embargo on Alunorte adds to the uncertainty in the aluminium industry,” he added.