Chicago’s Century Aluminum reported second quarter numbers on Thursday. The firm’s just-ended quarter was a challenging one, as they turned in a net loss of US$9.5 million for that time period. However, Century’s numbers year-on-year are an improvement, as it reported a loss of US$33.9 million in Q2 2015.
According to Century, a US$4.9 million drop in cost or market inventory adjustment had a significant impact upon the bottom line. The firm’s adjusted net loss as a result was US$4.6 million.
Century’s numbers this quarter are an improvement over those of Q2 2015 due to a US$30.9 million impairment charge related to the permanent closure of the firm’s Ravenswood smelter, as well as a US$25.7 million charge for lower of cost or market inventory adjustments. A labor disruption at its Hawesville smelter last year also put a dent in that quarter’s earnings to the tune of US$11.7 million.
Sales were US$326.8 million for the quarter, lower year-on-year from Q2 2015’s US$523.5 million total. Shipments for the quarter were 185,567 metric tons, off from Q2 of last year, when it was 233,950 metric tons. Century attributes the drop in sales from curtailments made in the latter half of 2015.
Numbers for the first half of 2016 were as follows – the firm posted a net loss of US$25.7 million, down from last year’s first half net income of US$39.9 million. Sales for the first half totaled US$645.6 million, off from a total of US$1.1 billion in last year’s first half. Shipments for the half were 368,186 metric tons, down from last year’s first half total of 479,208 metric tons. The drop in shipments and corresponding drop in sales is a result of the same curtailments in 2015 mentioned above.
“Geopolitical uncertainty and volatility have persisted throughout 2016,” said Constellium’s President and Chief Executive Officer Michael Bless. “Recent events have caused additional distortions in the currency markets and in interest rates, further pressuring commodities prices. The aluminum price has performed relatively well in these difficult market conditions. Demand in our end markets remains robust and, barring a significant exogenous shock, should remain so. The supply picture has been largely static over the last few months. That said, forecasters predict significant production increases in China during the second half of the year; this incremental supply is expected to come from new capacity as well as from the restart of curtailed plants. The primary aluminum industry in China continues to be bolstered, in myriad ways, by state support which is clearly illegal under global trade rules. We strongly believe it is now high time that action is taken to confront this critical issue, which poses a clear and present danger to the remaining U.S. aluminum industry.”
“Within this challenging environment, we continue to manage the company with an emphasis on the integrity of our operations,” he continued. “Safety performance has been encouraging; we insist on continuous improvement in this most important area. During the second half of 2015, we took aggressive actions to protect the competitiveness of our operations. In the recently completed quarter, we again exceeded our product mix and cost structure targets. This strict focus on our operations will preserve Century’s ability to capitalize when the market environment becomes more favorable.”
“We reached a new agreement with a third-party supplier to purchase the majority of electric power required for our Mt. Holly smelter. Regrettably, we continue to be required to purchase twenty-five percent of the plant’s power consumption from the state-owned provider; the high cost of this power puts Mt. Holly’s average power cost well above the global median. We thus continue to require a structural change to our electric power arrangements in South Carolina; achievement of this objective would also allow us to restart the half of the plant that is presently idled,” he concluded.