CHICAGO Kaiser Aluminum Corp. expects "mild headwinds" to continue to impact its earnings during the second quarter, but maintains that 2013 results should beat those of the prior year.
The Foothill Ranch, Calif.-based aluminum company recorded net income of $33.5 million for the first quarter ended March 31, up 26.4 percent from $26.5 million in the year-ago quarter, despite sales that narrowed 7.7 percent to $337.4 million, according to earnings data released April 23.
However, value-added revenue slipped to $187 million in the first quarter of 2013, down 4.1 percent from $195 million in the first quarter of 2012, Kaiser said, attributing the drop to weaker demand resulting from a "modest inventory overhang" in the aerospace supply chain, "relatively flat" automotive build rates and "weak" demand from general industrial applications.
Lower value-added revenue was partially offset by a $4.5-million payment from a customer that didnt fulfill minimum volume obligations under a multiyear contract, Kaiser said.
"While we expect mild headwinds will continue in the second quarter, we remain optimistic that 2013 results will exceed our record 2012 results," Kaiser president and chief executive officer Jack Hockema said in a statement. "Our long-term prospects remain strong, particularly as end-market demand continues to improve."
Kaiser continues to bolster its manufacturing base with several projects, in addition to a previously announced $35-million new casting unit in Trentwood, Wash., Hockema said. Other capital projects total approximately $60 million and are devoted to expanding heat-treat plate capacity, supporting new automotive programs expected to launch in coming years, and enhancing efficiency, he said.
"In the meantime, we expect to continue to realize benefits from the growth initiatives and investments we have made in recent years to increase capacity, improve efficiency and quality, and expand our product offering," Hockema said.