Cleveland rolled aluminium firm Aleris International, Inc. reported results for the first quarter on Wednesday. Though shipments rose over the first three months, the rise was not enough to keep the bottom line out of the red.
In the first quarter the firm shipped 221 thousand metric tons of aluminium product, up on the year from last year’s opening-quarter total of 209 thousand metric tons. New multi-year contracts and growth in the Asia Pacific region helped boost shipments of aerospace aluminium, while an increase in shipments to North American automakers helped boost overall automotive aluminium shipment totals.
Revenue for the first quarter totaled US$877 million, good for a US$75-million increase on the year. Aleris’ commercial margin for the quarter totaled US$388 million, an increase on the year from last year’s commercial margin of US$325 million.
Segment income rose in the quarter, from US$72 million in last year’s opening quarter to US$102 million in the just-ended quarter. The North American segment reported US$57 million in income, European operations contributed another US$37 million, and Asia Pacific operations added on another $8 million for the quarter.
Aleris’ adjusted EBITDA enjoyed a healthy increase, from US$54 million in last year’s first quarter to US$85 million in the just-ended quarter, setting a company record. Affecting both numbers was an improvement in rolling margins and favorable metal spreads, a 6-percent bump in total volumes, and a better product mix.
Overall the firm posted a net loss in the quarter of US$33 million, down from last year’s first-quarter net profit of US$5 million. Though buoyed somewhat by a US$13 million decrease in start-up costs at the North America ABS Project in Lewisport, Kentucky, US$65 million in unfavorable changes to unrealized derivative gains effectively killed the opportunity for a net profit last quarter.
“We are off to a strong start this year with record first quarter Adjusted EBITDA, significant growth in aerospace and continued growth in commercial shipments from our new automotive assets in North America,” explained Aleris Chairman and CEO Sean Stack. “Following the hard work by our teams to ramp up the strategic investments we have made to serve these industries, it’s both exciting and rewarding to see these strong results. With our multi-year aerospace agreements in place and committed automotive volumes in North America, we expect to continue this momentum in the second quarter.”
Going forward Aleris expects segment income and adjusted EBITDA to surge, while demand for aerospace and automotive aluminium will continue to rise. Demand for heat exchangers and from European automakers is expected to weaken, however. Metal spreads in North America are projected to be favorable, but inflationary cost pressure is predicted to be problematic.
Ranked by Forbes as one of the United States’ largest privately-held companies, Aleris is a global leader in aluminum rolled products serving diverse industries including aerospace, automotive, building and construction, commercial transportation and industrial manufacturing. Headquartered in Cleveland, Ohio, Aleris operates production facilities in North America, Europe and Asia.