Despite a Difficult Q1, Century Sees Clear Sailing Ahead Thanks To Trump Aluminium Tariffs

Despite a Difficult Q1, Century Sees Clear Sailing Ahead Thanks To Trump Aluminium Tariffs

Chicago’s primary aluminium producer Century Aluminum disclosed results for this year’s first quarter on Thursday. Though sales were up, the company’s overall financial picture was dimmer than that of the quarter preceding it.

In the first quarter, Century shipped 187 thousand metric tons of product, down slightly from the prior quarter’s total of 189 thousand metric tons. Net sales in the quarter totaled US$454.5 million, up from the fourth quarter’s total sales of US$433.8 million. Century turned in a net loss of US$300 thousand, a reversal from the prior quarter’s net profit of US$35.8 million. The company said that the losses were blunted in part by a US$3.2-million benefit from lower cost or net realizable value (“NRV”) inventory adjustments.

The firm’s adjusted net loss for the quarter figured at US$3.5 million, also a reversal from the previous quarter, when the adjusted net income came in at US$24.8 million. Adjusted EBITDA in the first quarter was US$21.8 million, a drop from the prior quarter, when the figure was US$60.2 million. Century attributes the fall in part to a rise in raw material costs, which was, in turn, partly mitigated by a rise in premiums both locally and at the LME.

Michael Bless, President and Chief Executive Officer, commented that, despite the less-than-stellar numbers in the quarter, his firm expects to come roaring back thanks to the blanket tariffs on imported aluminium instituted near the close of the quarter.

“Industry fundamentals remain generally strong, with attractive demand growth persisting in most global regions. In addition, the previously announced Section 232 tariffs became effective in late March, creating the opportunity for a fairly-traded environment in the U.S. for the first time in decades. This bold action by the U.S. administration has immediately had the intended effect of enabling the restart of U.S. primary production by Century and our industry peers. We remain confident that any exemptions from the tariffs will be limited and will be formulated to maintain the tariff regime’s effectiveness.”

Bless concluded by opining that Century is now in a secure position, ready to make the most of an aluminium market his firm sees as being in the midst of a strong recovery.

“Century is safely supplied for the foreseeable future. That said, the alumina index price, which had fallen to normalized levels by early 2018 as we expected, briefly jumped to an all-time high. This development has more than offset the increase in the metal price over the same period. We do not believe this environment can persist and have already seen the alumina price begin to fall; we are confident this trend will continue. We thus intend to maintain the planned trajectory of our various projects, including most notably the restart of capacity at Hawesville. Of course, we will continue to monitor market conditions and maintain appropriate flexibility to adapt our plans as appropriate.”