CHICAGO Kaiser Aluminum Corp.s profits narrowed in the third quarter as a continued aerospace inventory overhang, construction projects and maintenance expenses dented results.
The Foothill Ranch, Calif.-based company reported net income of $25.4 million for the three months ended Sept. 30, down 13 percent from $29.2 million in third quarter of 2012, as sales fell 4.7 percent to $319.9 million, the company reported after market close Oct. 17.
Kaisers net income for the first nine months of 2013 fell 1 percent to $77.5 million compared with same period last year as sales declined 5.7 percent to $986.2 million.
Kaiser posted shipments of 141.1 million pounds in the third quarter, down 4.3 percent from 147.5 million pounds in the third quarter of 2012. Shipments in the first nine months of 2013 totaled 426.5 million pounds, off 5.5 percent from 451.4 million pounds in the year-ago period.
Lower profits reflected "manufacturing inefficiencies" which Kaiser said were related to construction of its new casting complex and the continued expansion of its Trentwood facility in Spokane, Wash., as well as an "extended" planned equipment outage at its Newark, Ohio, facility.
Kaiser Aluminum expects issues related to construction and downtime to impact operations in the fourth quarter as well, president, chief executive officer and chairman Jack Hockema said in a statement. The company expects long-term benefits from such capital spending to offset the short-term pain, Hockema said, noting that increased heat-treat plate capacity at Trentwood is needed to address production bottlenecks.
"Despite some adversity in the third quarter of 2013, we continue to be very optimistic regarding the longer-term outlook for our business," Hockema said. But seasonal demand weakness and maintenance expenses will likely offset any improvements in performance in the fourth quarter, he warned.
On the automotive front, Hockema said Kaiser has seen a "step-change" increase in value-added revenue from automotive extrusions. The development "represents the beginning of a new phase of growth for our company," Hockema said.
Kaiser has invested more than $400 million in capital projects since 2006, including $80 million in 2013. Besides boosting automotive extrusion capabilities, the company has allotted $45 million to increase heat-treat plate capacity at the Trentwood facility by roughly 10 percent. A $35-million casting unit in Trentwood is slated for completion next year (amm.com, Aug. 19).