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Aleris brings down losses in Q2 2017; registers rise in EBITDA
Aleris Corporation reported net loss of $2 million in the second quarter ended June 30, 2017 compared to net loss of $13 million in Q2 2016. Adjusted EBITDA was up slightly to $66 million from $65 million in Q2 2016.
Commenting on the results, Sean Stack, Aleris Chairman and CEO said. "We delivered solid results in the second quarter and first half." "I am very pleased with our global team's focus and execution during the quarter, delivering much stronger operating performance while also making substantial progress on our Lewisport automotive expansion. As we expect to conclude the project later this year and begin shipping product, we will have strategically repositioned our business, enabling Aleris to focus on higher growth and a much higher value added mix."
Higher adjusted EBITDA was driven by improved operating performance and a favourable mix of product sold, improved aluminium prices and improved scrap availability. Improved rolling margins also increased Adjusted EBITDA approximately $2 million.
Wage inflation, higher raw material costs, a weakening U.S. dollar, repair and maintenance spending etc. impacts the results negatively. Productivity benefits were limited by lower volumes and increased investments in research and development.
Despite the decrease in loss, net loss was impacted by $10 million increase in interest expense, a $5 million increase in start-up costs, tax related costs and unfavourable variation in metal price lag.
Aleris report solid rebound in North America through better demand, margins and operating performance. Europe plate and sheet mix improvement partially offset aerospace and automotive headwinds slightly offset by weaker U.S. dollar. North America autobody sheet project continues to progress on schedule.
The company projects the segment income and adjusted EBITDA to be modestly lower than the third quarter of 2016. Weakening U.S. dollar expected to negatively impact Europe results. Solid regional demand continues in Europe with continued focus on our product mix.
In the second quarter of 2017, capital expenditures were $55 million, as compared to $100 million in the second quarter of 2016. As of June 30, 2017, Aleris had liquidity of approximately $300 million.
Year-to-Date Results for the six months ended June 30, 2017 include revenue of approximately $1,450.4 million compared to approximately $1,367.4 million for the same period in 2016. The increase was primarily attributable to higher average price of aluminium. Net loss stood at $38 million in the current year compared to a net loss of $19 million in 2016. Adjusted EBITDA increased to $118 million in the current year from $109 million in 2016.
Capital expenditures during the third quarter of 2017 are expected to be lower than the third quarter of 2016. The company expects capital spending of approximately $240 million to $250 million in 2017.
On August 29, 2016, Aleris Corporation entered into an Agreement and Plan of Merger with Zhongwang USA LLC. The Merger is subject to customary regulatory approvals. The Merger Agreement may be terminated by Aleris Corporation or Zhongwang USA on or before August 31, 2017, the date the transaction will automatically expire by its terms.Get fresh Aluminium data and insights
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