Aluminium supplier Alcoa Corp has lowered its full-year earnings outlook after net income fell in the second quarter due to costs incurred as a result of the Section 232 import tariffs imposed by the United States in March.
Alcoa - the first major aluminium company to report earnings reflecting the impact of the Section 232 tariffs - forecast full-year adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) at $3-3.2 billion, down from a projected $3.5-3.7 billion in the previous quarter, according to its earnings report on Wednesday July 18.
Revenue for the three months ended June 30 rose to $3.58 billion from $3.09 billion in the preceding three months, corresponding with high aluminium prices on the London Metal Exchange. But net income fell to $75 million from $150 million in the same comparison due to costs incurred from the Section 232 tariffs imposed by President Donald Trump on March 8.
“In the second quarter, Alcoa incurred $15 million of costs for tariffs on imports from its foreign operations for US sale,” the company said on Wednesday. “Alcoa’s imports were primarily from Canada, where the US government’s Section 232 tariffs became effective on June 1, 2018.”
Alcoa also said that uncertainty continues to exist in the global supply chain because of the tariffs, with ongoing alumina supply disruptions in the Atlantic region also contributing to the uncertainty.
The company also provided an update on its Warrick smelter in Evansville, Indiana, which suffered a temporary outage of its third potline in late May. Alcoa now says that it plans to restart the third potline by year-end.