American aluminium smelter Century Aluminum released results for the fourth quarter and full year of 2018 on Thursday. Though shipments and sales rose in both periods, elevated alumina prices weighed down financial numbers for both the quarter and the year.
The fourth quarter saw Century ship 199,466 metric tons of product, up from the prior quarter’s shipments of 182,926 metric tons. The firm chalks up the 9-percent increase on restarts at both Hawesville and Sebree smelters.
Century’s fourth-quarter net sales totaled US$486.9 million, besting the prior quarter’s net sales of US$481.8 million by 1 percent despite lower prices at the London Metal Exchange. The firm posted a net loss for the quarter of US$65.0 million, down from the third quarter’s net loss of US$20.3 million.
The fourth quarter saw an adjusted net loss of US$40.7 million, reversing the third quarter’s adjusted net profit of US$2.3 million. Adjusted EBITDA for the quarter figured at US$(18.1) million, also a reversal of the prior quarter’s adjusted EBITDA of US$28.7 million, which Century says is the result of high alumina costs in relation to those of primary aluminium.
For the year, Century shipped 749,850 metric tons, up on the year from 2017’s total shipments of 743,198 metric tons. Hawesville’s restart helped bolster that total, which was limited somewhat by equipment failures at Sebree.
Century’s net sales for 2018 came in at US$1.893 billion, surpassing the prior year’s net sales of US$1.589 billion. The year saw the firm post a net loss of US$66.2 million, in contrast to the prior year’s net profit of US$48.6 million.
Century’s 2018 adjusted net loss figured at US$13 million, reversing 2017’s adjusted net profit of US$34.7 million. Last year’s adjusted EBITDA came to US$86 million, down from the previous year’s adjusted EBITDA of US$167.5 million, also a casualty of higher alumina prices relative to those of primary aluminuim.
“Conditions in our industry remain sound,” noted Century’s President and CEO Michael Bless. “The global deficit in primary aluminum in 2018 was over 1.5 million tonnes, consisting of a surplus in and a deficit of over 2 million tonnes in the remainder of the world. This global deficit level is expected to repeat in 2019. Demand continues to be strong in our markets in the U.S. and Europe. The alumina price remains materially above historical levels, correlating to 23% of the metal price during the fourth quarter; we continue to assess alumina’s fair value as 17% or below. Bottom line, we believe industry conditions should be attractive for Century during 2019, especially once the geopolitical picture for commodities generally becomes clearer.”
“We made good progress in our operations during the last several months. The restart of the idled capacity at Hawesville remains on schedule and on budget, with the startup of the last of the curtailed potlines nearing completion. The next step will be the determination of the rebuild schedule for the two potlines that have been continuously operating. Most important, the team at Hawesville has accomplished this complex process without a serious safety incident; this laudable achievement is the result of meticulous planning and training, followed by attention to detail during the execution phase. At Mt. Holly, we concluded a two-year extension to the 75 percent market power based contract; we remain determined and fully committed to finding a path to achieving full market access, which would enable a return to full production.”
“Controllable cost performance was excellent during the quarter,” concluded Bless. “The relationship between alumina and aluminum prices, as we forecast, had a negative impact on financial performance. In addition, cash flow was impacted, as expected, by the bulk of the remaining capital spending for the Hawesville restart project. First quarter financial performance will again be burdened by high realized alumina prices as alumina purchased several months ago will be reflected in our financial statements. It is important to note that beginning in the second quarter of 2019, we anticipate EBITDA to be positive at spot prices and our liquidity remains strong. In addition, we are confident the company’s financial position will strengthen as a result of incremental profitability from the additional production volume at Hawesville, combined with a reduction in the capital required for this project.”