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Noranda optimistic despite fall in ’12 earnings

Keywords: Tags  Noranda, earnings report, 2012, Layle K. Smith, bauxite, Midwest premium, aluminum, Michael Cowden

CHICAGO — Noranda Aluminum Holding Corp.’s earnings fell sharply last year as the company was hammered by lower aluminum prices on the London Metal Exchange, lower shipments and losses in its bauxite segment.

But the Franklin, Tenn.-based company said it expects a brighter 2013 thanks to better companywide operations and continued improvements in demand.

"Although our 2012 results were negatively affected by LME prices that, in real terms, reached points that were among historical lows, we experienced throughout the year stable, solid demand," Noranda president and chief executive officer Layle K. "Kip" Smith said in a statement released with earnings data Feb. 20. In addition, the company benefited from "attractive" Midwest and fabrication premiums for its key aluminum products.

Noranda worked through operational problems, particularly in its upstream operations, in the second half of 2012, and the company’s upstream business is currently producing at expected levels, Smith said. Noranda also is more optimistic about 2013 given more improvements expected in both the U.S. economy and LME prices, he added.

Noranda posted net income of $49.5 million last year, down 64.9 percent from $140.9 million in 2011 on sales that fell 10.6 percent to $1.39 billion. Fourth-quarter net income tumbled 82.8 percent to $4.2 million from $24.4 million a year earlier on sales that slid 1.7 percent to $332.9 million.

Noranda shipped 572.3 million pounds of primary aluminum last year, down 1.6 percent from 581.4 million pounds in 2011. The net cash cost per pound shipped rose 8 percent to 81 cents from 75 cents in the same comparison, but the average realized Midwest transaction price per pound shipped skidded 13.7 percent to $1.01 from $1.17.

Also hurting results was a $4.1-million loss by the company’s bauxite segment in the fourth quarter as a result of increased operating costs, reduced shipping volumes and bad weather, Noranda said.

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