Century Aluminum Company reports second quarter 2018 results

Century Aluminum Company reported net income of $19.4 million for the second quarter of 2018.  Results were negatively impacted by $8.5 million related to the equipment failure at Sebree and $3.0 million in expenses related to the Hawesville restart project.  This result compares to a net loss of $0.3 million for the first quarter of 2018, which included a $3.2 million benefit from lower of cost or net realizable value ("NRV") inventory adjustments.

Adjusted net income for the second quarter of 2018 was $30.9 million compared to an adjusted net loss of $3.5 million for the first quarter of 2018.

For the second quarter of 2018, adjusted EBITDA was $54.5 million, up $32.7 million from the first quarter of 2018.  The increase was primarily attributable to higher LME and regional premiums and lower realized alumina costs.

Sales for the second quarter of 2018 were $470.0 million compared with $454.5 million for the first quarter of 2018.  Shipments of primary aluminum for the second quarter of 2018 were 180,220 tonnes, compared with 187,238 tonnes shipped in the first quarter of 2018, reflecting the lower production volume due to the equipment failure at the Sebree smelter.

Century's cash position at quarter end was $124.0 million and revolver availability was $186.7 million.

“Industry conditions remain generally favorable,” commented Michael Bless, President and Chief Executive Officer.  “Downstream demand in most sectors and regions, especially in the U.S., continues to be strong, producing attractive growth in primary metal consumption.  Consensus forecasts predict a global deficit for primary aluminum in 2018, despite a surplus in China of nearly one million metric tons.  We see this environment, buttressed by accommodative global growth, continuing for the foreseeable future.”

Mr. Bless continued, “These attractive trading conditions continue amidst some recent pricing volatility.  The alumina price remains well above its fundamentally supported level due to short-term concerns over a small number of actual and potential supply disruptions.  The aluminum price itself has weakened over the last two months in concert with other commodities and risk assets; given the strong fundamental global economic environment, this trend should reverse reasonably soon.  In the U.S., the Section 232 relief implemented by the Trump administration has resulted in significant investment in the primary industry; we currently estimate that by the end of 2018, U.S. primary aluminum production will have increased by around 60% from 2017 levels. Given this success, we remain confident that the administration will continue to reinforce its consistent objective of supporting the restart of U.S. primary aluminum capacity and the long-term competitiveness of the industry.”

“In this context,” concluded Bless, “we continue to move forward with the restart of our idled capacity.  In June we began energizing cells in the first of the three curtailed potlines at Hawesville, and are hard at work rebuilding cells in the other two lines.  We are proud that this large and complex project has thus far been successfully achieved with no significant safety incidents; the safety of our employees and contractors will continue to be our first priority.  The restart project remains on schedule and within budget; it continues to represent an attractive investment for our shareholders, even in the present slightly weaker pricing environment.  We have also prepared the potline at Sebree for restart after the unfortunate power equipment failure in late May, and have begun restarting these cells; we expect this process to be completed by the end of the third quarter.”