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Kaiser Profits Up in Q3

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Kaiser Aluminum credited aerospace demand and price increases for driving profits in the third quarter.

The Foothill Ranch, Calif.-based aluminum producer reported net income of $22 million in the third quarter, compared with net income of $20 million in the year-ago period. Through nine months, net income increased 11.5 percent to $68 million.

Third-quarter net sales totaled $393 million, compared with $333 million in the same quarter last year. Year-to-date sales increased 14.7 percent to $1.2 billion at quarter’s end.

““Third-quarter 2018 results reflected higher aerospace shipments as supply chain destocking continues to moderate and from the full realization of price increases implemented in the second quarter 2018,” said Jack A. Hockema, chairman and CEO of Kaiser Aluminum.

Hockema added that strong operating leverage and improved sales margins helped offset the temporary impact of tariffs on the company’s internal cross-border shipments. 

“We are awaiting government approvals of certain countermeasures that we have initiated to eliminate nearly all our cross-border tariff costs and retroactively recover costs incurred,” he said. “Although the tariffs have negatively impacted short-term results, we continue to anticipate that the long-term impact to us will be neutral to slightly positive should the tariffs remain in place.”

Looking ahead to the fourth-quarter and full-year results, Hockema said the company anticipates mid-single-digit growth in shipments and value-added revenue in 2019. “We expect continued underlying demand strength in the fourth quarter 2018 with moderating destocking in the aerospace supply chain and normal seasonality in industrial demand.”

Beyond this year, Hockema said he expects demand across Kaiser’s end markets to be strong. However, he noted that improved sales margins are still historically low.

“We will continue to monitor market conditions to determine timing for further price increases to restore our sales margins to a level more reflective of the strong overall demand climate,” Hockema said. “Longer-term, we remain well-positioned in our served markets to capitalize on the secular demand growth for our aerospace and automotive applications and are encouraged by the growing demand for our general engineering products.”