Aleris International reports higher third-quarter earnings

Aleris International Inc. has reported improved third-quarter earnings despite lower sales compared to a year earlier.

The producer of rolled aluminum products and aluminum recycler said its net income in the quarter rose 18%, to $33 million from $28 million.

Sales at Aleris fell 13%, to $1.08 billion from nearly $1.25 bilion.

Aleris said an improved product mix resulting from higher demand from the company's aerospace and automotive market segments, higher North American building and construction volumes, and a lower percentage of recycling toll volumes partially offset the negative impact of a 20% decline in London Metal Exchange prices, tighter metal spreads, a stronger U.S. dollar and weaker regional European demand.

Aleris said its third quarter 2012 net income was helped by a $22 million favorable variation in unrealized gains on derivative financial instruments, a $12 million one-time contract termination charge recorded in the third quarter of 2011, and a $6 million favorable variation in currency exchange rate gains on debt. Partially offsetting these favorable items were a $4 million increase in start-up expenses related to the company's Zhenjiang, China, rolling mill, a $3 million increase in depreciation expense associated with strategic capital expenditure initiatives, a $4 million unfavorable variation in metal price lag (metal price lag represents the financial impact of the timing difference between when aluminum prices included in revenues are established and when aluminum purchase prices included in cost of sales are established), and an $8 million increase in income tax provisions compared to the third quarter of 2011.