Norsk Hydro cancels plans to sell automotive structures business UPDATE

Norsk Hydro cancels plans to sell automotive structures business UPDATE

	Published : Fri, 15 Jun 2007 10:09 By : Agencies Print this Story

(Updates with additional detail, background)

OSLO (Thomson Financial) - Norsk Hydro ASA said it has decided not to sell its automotive structures business -- which specialises in car bumpers -- and has instead decided to focus on strengthening the division, after the recent sales process failed to turn up a buyer willing to match Hydro's own valuation of the division.

Despite announcing the sale plans at the end of last year, Hydro said today that it has decided to focus on turning the business around.

According to Svein Richard Brandtzaeg, head of Hydro's Aluminium Products division: 'We are confident that we will achieve the first positive results from the turnaround already in 2008.'

He said that the firm believes that 'stronger management, a more future-oriented structure and a strong focus on financial results' will help the division achieve profitability.

While no details were given on potential buyers, Brandtzaeg said the sales process had shown that Hydro's valuation of the unit's business potential is greater than that estimated by possible buyers.

Hydro's structures business unit is mainly involved in the production of extruded aluminium bumper beams in Europe and the US.

Earlier this year, Hydro sold its Castings business -- which makes cast aluminium engine blocks and cylinder heads -- as well as its part-owned production of magnesium-made automotive components.

The firm had also been expected to sell its Structures unit, but today Hydro said it had decided against this, arguing that this particular business faces 'different challenges' to the other divisions, and is a better fit with the rest of Hydro's remaining downstream aluminium operations.

During the past months, the company added that it has won 'a number of new contracts' for the production and delivery of bumper beams from its plants in both Europe and the US.

alastair.reed@thomson.com

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