California semi-fabricated aluminium producer Kaiser Aluminum Corporation reported results for the first quarter yesterday. Despite challenges relating to Boeing’s 737 MAX, the firm reported strong financials for the quarter.
In the year’s opening quarter Kaiser shipped 163 million pounds of product, surpassing the prior quarter’s shipments by 4 million metric tons, but down on the year by 3 million metric tons.
Net sales in the quarter totaled US$395 million, besting the previous quarter’s net sales by US$6 million, and up on the year by US$7 million. Though shipments fell by 2 percent in the quarter, a rise in average selling price of 4 percent more than made up for the weaker shipments in the quarter.
Net income in the first quarter totaled US$28 million, up by US$4 million from the previous quarter and better by US$2 million on the year. Adjusted net income in the first quarter came to US$30 million, level with the prior quarter and up by US$3 million on the year.
The first quarter’s adjusted EBITDA figured at US$56 million for the quarter, rising by US$1 million on the quarter and US$8 million on the year. The rise in adjusted EBITDA was largely the product of increased value-added revenue and pricing on non-contract sales.
“Continuing the positive trend from the second half 2018, we reported strong first quarter 2019 results,” noted Jack A. Hockema, Chairman and Chief Executive Officer, in a statement. “Improving aerospace demand and non-contract value added pricing drove strong results in the quarter, partially offset by approximately of cost inefficiencies at our Trentwood facility, a combination of unplanned equipment downtime in the finishing operations and purchased rolling ingot costs necessitated by our planned casting furnace rebuilds.”
“Although demand for our general engineering products remains strong, we allocated a portion of our capacity for general engineering products in the quarter to address strong aerospace demand. This contrasts with 2017 and early 2018 when relatively soft aerospace demand enabled capacity to shift toward general engineering products.”
Going forward, Hockema projected a strong 2019 despite certain challenges in the aerospace realm.
“The recent reduction in 737-MAX build rates has introduced uncertainty for commercial aerospace industry demand. While it is likely that the reduced build rates will eventually lead to some level of supply chain destocking, the amount and timing are uncertain until the situation is resolved. Meanwhile, demand for military aircraft continues to increase for the new generation F-35 Joint Strike Fighter and the modernized F-15X Super-fighter and F/A-18E/F Super Hornet fighter aircraft.”
“Overall, while we continue to monitor the 737 MAX situation, at this time we have no specific information to warrant a change in our full year 2019 outlook for EBITDA margin above 25% and low to mid-single digit percent year-over-year increase in both shipments and value added revenue,” opined Hockema.