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Sales Up 5 Percent at Kaiser in 2017

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Kaiser Aluminum Corp. achieved record shipments in 2017 thanks to strong demand for the company’s general engineering and automotive applications, the Foothill Ranch, Calif.-based aluminum maker reported in February.

Full-year net sales were $1.4 billion last year, up approximately 5 percent from $1.3 billion in 2016. The company said increased sales reflected a 2 percent increase in shipments, as well as a 3 percent jump in average selling price.

"For the full year 2017, we achieved record shipments and near-record adjusted EBITDA and margin despite headwinds from aerospace supply chain destocking, lower-than-anticipated automotive build rates, competitive price pressure, and construction-related disruptions at our Trentwood facility," said Jack Hockema, chairman and CEO of Kaiser. “Despite the inefficiencies at our Trentwood facility due to construction-related project work, overall manufacturing cost efficiency continued to improve as strong performance across the manufacturing platform more than offset Trentwood inefficiencies.”

Despite the increase in shipments, value added revenue decreased 3 percent in 2017 to $786 million due to lower margins on non-contract sales and a leaner mix of shipments. Overall, Kaiser reported net income of $45 million in 2017, compared with net income of $92 million the previous year.

In the fourth quarter, the company recorded a net loss of $15 million, compared with net income of $25 million in the year-ago period. Kaiser said its fourth-quarter results reflected an incremental $37 million non-cash tax expense because of federal tax reform legislation primarily related to revaluing its deferred tax assets.

Fourth-quarter net sales of $353 million were up approximately 6 percent from last year, which the company credits to a 1 percent increase in shipments and a 5 percent jump in average selling price. The company said the rise in average selling price reflected an approximately 21 percent increase in underlying contained metal and a 4 percent decline in value-added revenue per pound.

The company expects demand for its aerospace/high-strength applications to improve in 2018, as supply chain destocking runs its course and airframe manufacturers continue to ramp-up build rates. “We are very well positioned in the marketplace and, with supply chain destocking moderating as we proceed through the year, we expect mid-single-digit year-over-year growth in our 2018 shipments for these applications," Hockema said. "However, we continue to expect higher contained metal costs and competitive price pressure to continue in 2018.

As for automotive extrusion applications, Kaiser expects North American build rates to improve 1 to 2 percent this year. The company said that should correlate to mid-single digit growth for its automotive shipments and value-added revenue in 2018.

“As we proceed through 2018 and look longer-term, we anticipate improving results driven by growing demand for our aerospace, automotive extrusions and general engineering applications and continued improvement in underlying manufacturing cost efficiency," Hockema said.