Norwegian industrial group Norsk Hydro reported a smaller-than-expected 12% percent drop in first-quarter operating profit, helped by strong results for its aluminum metal business.
But Norsk Hydro said on Thursday its oil and gas production -- assets the company is selling to Statoil in a $30 billion deal -- will be hit by shutdowns in the coming months.
Group operating profit fell to 14.82 billion crowns ($2.45 billion) in January-March from 16.87 billion in the same quarter a year earlier but beat an average forecast of 13.56 billion crowns in a Reuters poll of 11 analysts.
Net profit rose 17 percent to 5.59 billion crowns, well above the average forecast of 3.87 billion, because better results from its aluminum business yielded a lower tax rate, compared with its oil and gas business.
"Net income from the quarter was positively affected by significantly lower tax rates than in previous quarters, reflecting strong earnings from the lower-taxed aluminium and international oil and gas businesses," Norsk Hydro ASA said.
Norsk Hydro said the shares in the new Hydro, stripped of the oil and gas business, will start trading on Oct. 1.
According to a Canadian newspaper, Hydro may be interested in bidding for Canadian rival Alcan, which has rejected a $28.5 billion hostile bid from U.S. Alcoa.
Hydro has declined to comment on the issue and did not mention any such activity in its earnings statement on Thursday.
Norsk Hydro reaffirmed its 2007 oil and gas production target of 585,000 barrels of oil equivalents per day (boed). It cut the target earlier this month to that level from 605,000
boed after Statoil cut its goal.
"Oil prices are expected to remain high, while downward pressure on gas prices is expected to continue during 2007," Norsk Hydro said in a statement.
"Planned production shutdowns on the Norwegian continental shelf are expected to have a negative impact on production in the coming months," it said.
Shares in Norsk Hydro closed at 209 crowns on Wednesday, down 0.8% and valuing the company at about $45 billion, including its roughly $30 billion oil and gas business.