Oslo - Norwegian aluminium and power generation group Norsk Hydro on Tuesday posted lower second quarter earnings, citing that a weak US dollar and higher production costs failed to offset higher aluminum prices.

In line with a recent profit warning the group said earnings before interest and tax dropped 44 per cent to 1.6 billion kroner (315 million dollars), compared to 2.88 billion kroner for the corresponding business period 2007.

Hydro posted turnover of 23.98 billion kroner in the second quarter, down 4 per cent from the second quarter 2007.

The company said global aluminium prices "remained strong in the quarter," but that it realized lower prices in Norwegian kroner due to the weaker US dollar rate against the Norwegian currency.

In its outlook, Hydro said "aluminium prices are expected to remain high due to increasing energy and raw material prices and energy supply uncertainties."

Industrial production in China was likely to remain strong while demand in the West suggested weaker development, the group said.

Last year, Hydro combined its gas and oil business with Norwegian rival Statoil to focus on its aluminium and power generation activities. (dpa)