Lower Aluminium Production Volume Takes Toll on Aleris’ Third-Quarter Financials
10 November 2017 by Staff
Cleveland rolled aluminium firm Aleris International, Inc. reported third-quarter results yesterday. Results were largely down due to lower production volumes which were, in turn, the result of planned production outages.
The firm shipped 199 thousand metric tons in the quarter, down year-on-year from last year’s shipping total of 214 thousand metric tons. The firm chalked up the drop to lower production volumes due to a lengthy but scheduled outage at the firm’s Lewisport hot mill, which was halted as a result of the firm’s North America autobody sheet (ABS) project. The ABS project also impacted the bottom line due to a US$9-million increase in start-up costs for the program.
Aleris recorded a net loss of US$66 million, down from last year’s third-quarter net loss of US$22 million. Adjusted EBITDA for the quarter came to US$46 million, off year-on-year from last year’s third quarter number of US$53 million. Revenue in the quarter totaled US$713 million, up year-on-year from last year’s Q3 total of US$683 million. In addition to the impact of lower volumes in the quarter, the firm experienced a US$28-million unfavorable change in unrealized derivative losses in the quarter.
Aleris chairman and CEO Sean Stack voiced optimism in the firm’s financial future, noting that internal and external impediments to profitability appear to be behind them.
“The third quarter marked a major turning point in our strategic realignment. Successfully completing our very complex Lewisport outage and expansion allows us to transition from planning, building, commissioning and spending to production and revenue generation. Solid fundamentals, strategic commercial wins and recent order patterns give us confidence going into 2018 that the disappointing short term trends in aerospace, European automotive and building and construction are temporary.”
Aleris updated investors on the progress of their planned merger with Zhongwang USA LLC, noting that the US$1-billion purchase of their company has been held up by objections from the U.S. government. The firm says that the merger agreement, which was initially scheduled to terminate if not completed by the end of August, has been extended to this coming Sunday, November 12.
Ranked by Forbes as one of the United States’ largest privately-held companies, Aleris was founded in the Cleveland suburb of Beechwood, Ohio when Commonwealth Industries, Inc. and IMCO Recycling Inc. merged in late 2004. The company produces aluminium rolled and extruded products, recycled aluminium, and specification aluminium alloy manufacturing in its fourteen plants held in three business units in North America, Europe, and China. Aleris employed over 6,500 individuals as of 2010. Among the industries it serves are aerospace, automotive, defense, building and construction, transportation, packaging, and consumer goods.