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Copper prices to weigh down General Cable

Keywords: Tags  General Cable, Gregory Kenny, Brian Robinson, earnings results, outlook, copper prices, copper, Comex aluminum

CHICAGO — Low copper prices could impact General Cable Corp. as far out as the third quarter of 2013, company executives said.

"It is possible we could see a little bit of a headwind into the third quarter," president and chief executive officer Gregory B. Kenny said during a question-and-answer session with analysts May 1. "Copper has broken a dime in the last day and a half. We’ll have to see where she goes."

Kenny noted that copper prices have been volatile in recent trading.

"It’s been coming down pretty hard, and we have seen aluminum tracking down as well," he said.

July Comex copper futures, the most actively traded contract, settled at $3.1045 per pound May 2, off sharply from the $3.7915-per-pound high recorded thus far this year on Feb. 1.

Big declines in prices can also lead to unusual buying patterns, Kenny said. "Some people wait out for the copper (price) to fall ... and then they will buy when it starts to look like it’s firming," he said. "So (there are) a lot of aberrations when these kind of movements occur."

But chief financial officer, executive vice president and treasurer Brian R. Robinson cautioned against reading too much into what he characterized as "short-term volatility" and "noise" for the Highland Heights, Ky.-based diversified manufacturer when set against a long-term perspective.

Copper prices fell sharply earlier in April only to rebound within a matter of days, Robinson said. "It’s too early to call," he said of the possible impact on third-quarter results.

Robinson compared the current market dynamics with those in the third quarter of 2011, which also saw a drop in metals pricing. General Cable thought at the time that the impact could spill over into the first quarter of 2012, but it instead saw the hit "isolated" to the fourth quarter of 2011, with a recovery in volumes and prices preventing first-quarter 2012 results from being affected.

Still, he conceded that recent tumbles in copper prices, while not as "dramatic" as those seen in 2011, were "quite sizeable."

The company estimates that operating results could take a $15-million to $20-million hit, mostly in the second quarter, because of a decline in metals pricing.

While lower metals prices mean that the usual seasonal uptick the company sees could be muted, Kenny expects to see a "sharp improvement" later in the year, he said.

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