CHICAGO Aleris International Inc. swung to a loss in the second quarter as tight scrap and specification alloy spreads, an aerospace inventory overhang and weaker-than-expected building and construction demand dented results, it said Aug. 1.
Aleris recorded a net loss of $11.7 million in the second quarter as revenue slipped 3.7 percent to $1.1 billion over the same period.
The Cleveland-based aluminum company said it expects scrap spreads in its North American rolled products business to remain narrow in the third quarter given weak London Metal Exchange prices for aluminum and stubbornly weak aerospace demand (amm.com, Aug. 1), as aircraft manufacturers continue to chew through high levels of raw materials inventory.
But the company also expects increased demand for value-added products from the automotive sector and the North American building and construction industry.
During a conference call following the release of earnings results, Aleris executives blamed the weak second-quarter showing from the U.S. building and construction market on poor weather, and forecast that the sector would ramp up in
the third quarter.
Aleris chairman and chief executive officer Steven J. Demetriou said the company performed well in the second quarter "despite continued headwinds from metal and scrap spreads and sluggishness in the global economy." The company expects "steady improvements" in the second half of 2013 and into 2014, thanks largely to forecast long-term growth in the aerospace and automotive sectors, he said.
Aleris rolled products business in Europe saw double-digit gains in shipping volumes of heat exchangers, as well as plate and coil. "We remain cautiously optimistic that these volumes bottomed out in 2012 and are now beginning to modestly rebound from cycle lows, although pockets of soft demand still persist," Demetriou said.