Aleris Corporation, a leading aluminum rolled products manufacturer reported positive results for the third quarter and nine months ended September 30, 2019 on November 5. The company reported a net income of US$25 million in Q3 2019 compared to net loss of US$26 million in Q3 2018. The company also reported record Adjusted EBITDA of US$115 million compared to US$77 million in Q3 2018.
Global aerospace volumes increased on strong demand and growth and global automotive volumes were up on higher North America demand. Europe automotive volumes were negatively impacted by softer regional demand. Business was positively impacted by favourable metal environment, improved rolling margins and higher scrap availability in North America. A stronger US dollar also favourably impacted Adjusted EBITDA approximately $2 million. A decrease in start-up cost at North America auto-body sheet project at Lewisport, Kentucky facility also impacted the results positively.
These favourable changes to net income were partially offset by a $2 million unfavourable variation in metal price lag. Capital expenditures stood at $20 million compared to US$25 million in the third quarter of 2018.
"Our global aerospace and automotive capabilities along with our North America common alloy and scrap position have once again led the way to another record quarter," Sean Stack, Aleris Chairman and CEO said. "We've been well positioned to capitalize on demand opportunities in our higher value end uses and we expect this momentum to continue through the end of the year," he added.
For the first three quarters of 2019, Aleris reported revenues of US$2,651 million compared to US$2,644 million for the same period of 2019. The increase was attributed to an improved mix of products, driven by increase in aerospace and automotive volumes and increased rolling margins. These factors were partially offset by lower aluminium and unfavourable impact of exchange rates.
Net income for first three quarters stood at US$16 million compared to a net loss of US$68 million in the prior year period. Adjusted EBITDA increased to US$308 million from US$215 million in the prior year period. The growth is attributed to an improved mix of products, improved rolling margins and a favourable metal environment in North America. These were partially offset by inflation and the absorption of expenses into Adjusted EBITDA.
Aleris expects its Q4 2019 segment income and Adjusted EBITDA to be higher than Q4 2018 and sequentially lower due to normal seasonality. The company expects higher global aerospace volumes coming from strong demand and fundamentals. North America automotive sales expected to increase but with a slower rate because of labour disruption in the automotive supply chain. Continued softness is expected for European market and favourable rolling margins expected in North America.
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