CHICAGO Kaiser Aluminum Corp. saw profits narrow in the second quarter but expects improved demand in the second half of the year as ramped-up automotive and aerospace activity compensates for traditional seasonal weakness.
The Foothill Ranch, Calif.-based aluminum company posted net income of $18.6 million for the three months ended June 30, down 11.4 percent from $21 million in the same period last year as sales dipped 4.7 percent to $328.9 million, according to data released after the close of markets July 24.
But Kaisers first-half net income increased 6.2 percent to $52.1 million from $47.5 million in the first six months of 2012 despite a 6.2-percent decline in sales to $666.3 million.
Kaiser continued to suffer from an "inventory overhang" in aerospace applications in the second quarter resulting from a "supply chain over-reaction" in late 2011 and early 2012 to airframe manufacturer readiness initiatives, Kaiser chairman, president and chief executive officer Jack Hockema said in a statement. But that situation should "abate somewhat" in the second half of 2013 while overall aerospace demand remains strong, he said.
"We continue to be very optimistic regarding the longer-term outlook for our business. In the nearer term, we see signs that the various headwinds in our end markets are moderating," Hockema said. "Our long-term value proposition remains intact."
That optimism is in large part because of expected strong demand for aerospace and automotive applications, Hockema said, noting that Kaiser continues to pursue growth initiatives aimed at meeting that demand, including boosting heat-treat plate capacity.
But while the future may be bright for value-added products, the results for the first half of the year were mixed, Kaiser indicated, noting that value-added revenue fell 2.4 percent to $371 million in the first half from $380 million a year earlier. The drop reflected the inventory overhang in the aerospace supply chain as well as "ongoing soft demand" for general industrial applications and lower automotive demand for aluminum extrusions for anti-lock braking systems, the company said.