Kaiser posts earnings surge, warns of slow first half

February 20, 2013 - 20:31 GMT Location: Chicago

KEYWORDS: Kaiser Aluminum , Jack A Hockema , earnings report , automotive , aerospace , extrusions , drawn , heat-treat plate

Kaiser Aluminum Corp’s earnings surged last year, but the company warned of a tepid 2013, at least in the first half of the year.

"Weak fourth-quarter demand for many of our end-market applications has continued in the first quarter as uncertain global economic conditions and weak North American industrial manufacturing demand continue to cloud our near-term visibility for general engineering and industrial applications," Jack A Hockema, chairman, president and ceo, said in a results statement on Tuesday February 19.

The Foothill Ranch, California-based company also expects automotive build rates in the first half of 2013 to be flat compared with the same period last year, Hockema said, while in the aerospace sector an "inventory overhang" of extruded and drawn products should dampen demand in the first half for most aerospace products except high-strength plate.

Still, Hockema said he was bullish about the prospects for Kaiser in the second half of 2013 and beyond, noting that the company planned to continue to bolster its manufacturing platform and to boost capital spending to between $50 million and $80 million in 2013. Projects include a new casting unit at the company’s facility in Trentwood, Washington, to expand rolling ingot capacity, as well as increased heat-treat plate capacity.

Kaiser’s net income soared to $85.8 million last year from $25.1 million in 2011 on sales that increased 4.5% to $1.36 billion. Fourth-quarter net income jumped 49.2% to $9.1 million from $6.1 million in the same period a year earlier despite a 1.1% decline in sales to $314 million.

Strong aerospace and automotive demand as well as better pricing and lower manufacturing costs were responsible for the big gains, Hockema said, and Kaiser also benefited from significant capital investments that have been made since 2006 to boost capacity, improve efficiency and expand product offerings.