Sapa reports strong quarterly earnings

Norway-based Norsk Hydro has reported improved second quarter 2016 earnings and profits for its Sapa aluminium extrusion joint venture company.

“Underlying EBIT (earnings before interest and taxes) for Sapa increased significantly compared to the same quarter of the previous year,” says the company, adding that earnings improved across all business areas, “driven by positive effects from improvement programs, increased share of value-add products and positive market developments.”

The company says in 2015, “The second quarter was negatively influenced by sharply falling metal premiums in North America.”

Sapa’s earnings in the second quarter of 2016 rose to 14.07 million Norwegian krone, or NOK ($1.67 million), up just 1.2% from the NOK13.9 million ($1.65 million) earned in the second quarter of 2015.

However, the quarterly “Reported EBIT” figure rose 40.7% from NOK655,000 ($77,560) in the 2015 second quarter to NOK920,000 ($108,900) in the second quarter this year.

Demand for extruded products in Europe and North America increased compared to the previous quarter by 4.5% and 3%, respectively, driven by seasonality, adds the firm.

Compared to the same period in 2015, market demand increased by 2.5% in North America and 1.5% in Europe. In North America, building and construction activity and automotive demand contributed positively. In Europe there were positive developments in automotive and transportation and a mixed picture in building and construction.

“Going forward, a continued moderate market growth is expected in Europe, while certain market segments in North America show indications of flattening out,” says Norsk Hydro in its news release. In both North America and Europe, aluminium substitution as a material used in the automotive industry is contributing positively, adds the firm.