UPDATE 1-Norsk Hydro Q4, dividend miss forecast amid continuing Brazil woes

Norwegian aluminium producer Norsk Hydro reported on Thursday much lower-than-expected fourth-quarter operating profits and full-year dividend amid continuing output restrictions in Brazil. Hydro's underlying operating profit for the quarter fell by 85 percent year-on-year to 534 million Norwegian crowns ($62.48 million), while analysts in a Reuters poll on average had expected a profit of 1.45 billion crowns.

Brazil last year forced the company to slash output from its Alunorte alumina refinery by 50 percent following a spill of untreated water from the facility, the world's largest of its kind and a key supplier to Hydro's metal smelters. Last month, the Brazilian state of Para lifted its part of the restrictions, but full production at Alunorte can only resume once a federal court follows suit, Hydro has said.

"Our results are reflecting the challenging situation we face in Brazil and higher raw material costs," Chief Executive Svein Richard Brandtzaeg said in a statement. Alunorte had made progress towards resuming normal production but the timing remained uncertain, he added.

Hydro's board proposed a dividend of 1.25 crowns per share for 2018, down from 1.75 crowns for 2017, while analysts on average had predicted a 1.58 crown payout. (Editing by Nerijus Adomaitis)