Kaiser Aluminium’s semi-fabricated products shipments up in Q1 2018

One of the world’s leading semi-fabricated aluminium producer Kaiser Aluminium Corporation announced financial and production results for the first quarter of 2018. The company reported net income of $26 million in Q1 2018, from $36 million in the same period previous year.

“First quarter 2018 results were driven by margin compression from escalating metal and freight costs while growing automotive and industrial demand and continued improvement in manufacturing cost efficiency provided some benefit to cushion the impact on adjusted EBITDA margin,” said Jack A. Hockema, Chairman and Chief Executive Officer.

 “We initiated and will continue to pursue additional pricing actions to mitigate margin pressure from increasing costs. However, realization of pricing often lags the timing of increased costs.”

Kaiser’s shipments of semi-fabricated aluminium products for the quarter was up from the prior year quarter as the impacts of strong general engineering demand and continued growth in automotive extrusion content more than offset the impact of destocking in the commercial aerospace supply chain. The company shipped 166 million pounds Q1 2018, up from 164 million pounds in Q1 2017.

The net sales recorded for Q1 2018 was $388 million, up from $355 million in Q12017.

Adjusted EBITDA in the quarter stood at $48 million, down from $54 million in the same period previous year. Kaiser said that the decline was driven by the adverse sales impact previously discussed cushioned by improvement in underlying manufacturing efficiency.

“Our outlook remains unchanged from what we provided during our fourth quarter 2017 earnings call. Demand for our automotive and general engineering products is strong, and aerospace demand is strengthening as the supply chain destocking begins to moderate and as airframe manufacturers continue to ramp-up build rates to address the large 9-year order backlog. In addition, the new defense budget and increased demand from U.S. allies strengthens the outlook for the F-35 Joint Strike Fighter, the F/A-18 Super Hornet and other military applications”, stated Mr. Hockema.

"The recent speculative spike in metal prices related to Section 232 tariffs and sanctions on Rusal, along with escalating freight costs, create a challenging short-term situation. Although we expect continuing margin pressure, we will be proactive in implementing price increases to address rising costs.”