By Victoria Klesty
OSLO (Reuters) -Aluminium maker Hydro said on Tuesday its renewable energy unit will get a cash injection from a newly formed joint venture, sending its shares higher even as it reported a bigger-than-expected drop in quarterly core profit.
Macquarie Asset Management will invest $332 million in the joint venture for a 49.9% stake in Hydro Rein, meaning all projects in the pipeline are fully funded for the next few years, Hydro said.
Hydro plans no further equity injections into Rein after injecting until now about 3.1 billion Norwegian crowns ($280 million) in equity, Chief Financial Officer Paal Kildemo told a conference call.
Hydro's share price rose 3.5% to 58.72 crowns at 0859 GMT, outperforming a 0.4% increase in the Oslo benchmark index.
"The key positive in our view is the announcement of the Hydro Rein transaction wherein valuation was much higher than our expectation," analysts at RBC Capital Markets said in a note to clients.
Hydro said markets for the light-weight metal were challenging and uncertain, and that it was curtailing some volumes in its recycling business and within its Extrusions unit in response, and may take further action based on market conditions.
"Hydro is responding to declining markets with firm mitigating measures," CEO Hilde Merete Aasheim said in a statement.
There are "no concrete plans" to reduce primary metals output at the moment, and Hydro's European capacity utilisation is still below 50%, Kildemo told the conference call.
Demand for aluminium has been hit by a global decline in construction this year due to high interest and concerns over the economy, although demand for auto production has been more stable.
Adjusted earnings before interest, tax, depreciation and amortisation fell to 3.90 billion Norwegian crowns ($352.7 million) for July-September from 9.72 billion crowns a year earlier, lagging an average poll forecast of 4.05 billion.
($1 = 11.0749 Norwegian crowns)