NEW YORK Noranda Aluminum Holding Corp.s third-quarter 2012 net income plummeted 87.6 percent from the year-ago quarter as the price of aluminum on the London Metal Exchange declined and shipments were disrupted due to Hurricane Isaac earlier this summer.
Noranda reported net income of $3.8 million in the three months ended Sept. 30, down from $30.8 million in the same period last year, marking an 85-percent plunge from $25.3 million in the second quarter of 2012.
"Our third-quarter 2012 results reflect LME levels, which reached near historical lows during the quarter, and we are prudently managing our balance sheet and cost structure through the current LME environment," Noranda president and chief executive officer Layle "Kip" Smith said in a statement.
Although three-month aluminum experienced an uptick in the third quarter, rising 12 percent to $2,126 per tonne on Sept. 28 from $1,902 per tonne on July 2, it bottomed out on Aug. 16 at $1,831 per tonne, hitting many primary producers third-quarter earnings hard.
"Persistent global macroeconomic concerns, particularly the European sovereign-debt crisis and fears of slowing economic growth in China, have dampened LME prices since the second half of 2011," Noranda said. "Substantially all of the companys external revenues are linked to the LME price, which averaged 87 cents per pound in the third quarter, compared to $1.09 per pound in the third quarter (of) 2011."
In addition to low LME prices, Hurricane Isaac, which hit Norandas Gramercy, La., alumina refinery on Aug. 29, also hurt earnings, having a $5.9-million negative impact on the segments profit due to lost contribution margins, losses on replacement alumina, and production inefficiencies incurred as the refinery operated at below normal levels.
Norandas third-quarter sales totaled $336.8 million, down 15.9 percent from $400.4 million in the third quarter last year and down 9.4 percent from $371.7 million in the second quarter of this year.
The company shipped 97.6 million pounds of flat-rolled products to third parties in the quarter, up slightly from 94.9 million pounds in the year-ago period.
Primary aluminum third-party shipments dipped to 120 million pounds in the third quarter from 123.8 million pounds in the same quarter last year.