Arconic earns 3% higher revenue in Q4 FY2020 despite decline in aluminium sales amid COVID-19

Arconic Corporation, an American industrial company specializing in lightweight metals engineering and manufacturing, announced its performance and financial results on February 23, 2021, revealing a 14 per cent year-on-year decline in aluminium sales to US$ 1.5 billion in the fourth quarter of 2020. Arconic CEO Timothy Donald Myers attributed the fall to weaker shipments to the aerospace industry. Sales in the full-year stood at US$ 5.7 billion, down 22 per cent from the previous year.

Myers forecasts sales to remain depressed year-on-year through the first half of 2021. He said, "Large commercial aircraft build rates remain soft as uncertainty in the airline industry continues to curb demand. As a result, elevated inventory in the supply chain and subsequent destocking is driving the decline in our sales, and we anticipate destocking to keep our sales depressed year-on-year through the first half of 2021."

However, despite the decline in sales, Arconic saw a 3 per cent quarter-on-quarter increase in revenue in the December quarter to US$ 1.5 billion, primarily due to growth in ground transportation and industrial product demand. But year-on-year, the revenue stood 14 per cent lower, reflecting weaker volumes in aerospace partially offset by growth in the industrial and packaging end markets.

In the entire year of 2020, Arconic generated US$ 5.7 billion of revenue, down 22 per cent from 2019 due to the COVID-19 impacts on production at the end-user market. Net loss in the full-year was US$ 109 million or $1.00 per share, down from the net profit of US$ 177 million or $1.63 per share in 2019. Net loss in the fourth quarter stood at US$ 64 million or $0.59 per share, compared with the net profit of US$ 168 million or $1.54 per share during the same period last year.

Fourth-quarter 2020 Adjusted EBITDA was down sequentially to US$ 151 million, while full-year 2020 Adjusted EBITDA stood at US$ 619 million.

Mr Myers said, “Our fourth quarter results demonstrate a steady climb in revenue since the onset of the pandemic as several indicators point to growing customer demand in many of the markets we serve, particularly in the ground transportation and industrial sectors. In the packaging market, we are continuing commercial dialogue with key customers and scheduling qualification trials. Through the remainder of 2021, we will continue optimizing our capacity utilization to align with market demand and broader macroeconomic conditions.”

Arconic expects full-year 2021 revenue to hover around US$ 6.6 – 6.9 billion, while Adjusted EBITDA to be in a range of US$ 675 – 725 million.

Arconic is also positioned to capitalize on the packaging market in 2022 with new capacity coming online to serve beverage can demand.

Myers said, "We're bringing our Tennessee can sheet facility back online and are executing multiple qualification runs with packaging customers to support new volumes in 2022 and beyond."