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Kaiser Aluminum announced Q4 and full year 2018 financial results

Metal News - Published on Wed, 27 Feb 2019

Image Source: SteelGuru
Kaiser Aluminum Corporation announced results for the fourth quarter and full year ended December 31, 2018. Mr Jack A Hockema, Chairman and Chief Executive Officer said that “Kaiser delivered excellent results in 2018, consistent with the outlook communicated at the beginning of the year and despite persistent headwinds from aerospace supply chain destocking, high contained metal and freight costs and Section 232 tariffs. For the full year 2018 we achieved record shipments, up 4% year-over-year, and value added revenue, up 5%, driven by strong demand. Record commercial airframe builds drove underlying demand growth, and aerospace supply chain destocking began moderating in the second half 2018, further enhancing demand growth. Aluminum extrusion content continued to increase on solid North American automotive builds, and demand for general engineering and industrial products remained strong throughout the year with normal second half seasonal weakness. Adjusted EBITDA improved USD 6 million year-over-year as sales volume and mix provided a USD 21 million benefit partially offset by an USD 11 million adverse pricing impact due to unrecovered high contained metal and freight costs and USD 3 million of Section 232 tariffs.”

Consistent with the Company’s capital allocation priorities, organic investments of USD 74 million focused on areas to enhance manufacturing cost efficiency, improve product quality, expand capacity and promote operational security, including capital spending related to the modernization of its Spokane, WA facility. In addition to organic investments, the Company invested USD 43 million to acquire Imperial Machine & Tool, a leader in multi-material additive manufacturing and machining technologies.

The Company continued to return cash to shareholders during the year through quarterly dividends and share repurchases that totaled nearly USD 100 million. In early 2018, the Company raised its quarterly dividend 10% to USD 0.55 per share, and in early 2019, for the eighth consecutive year, raised it an additional 9% to USD 0.60 per share.

In late 2018, the Company received approval for its Bellwood facility in Richmond, VA to operate as a Foreign Trade Zone, which serves to mitigate more than 50% of the tariff costs otherwise incurred on its internal cross border transactions. While decisions are still pending on specific product exclusion requests, the Company will continue to incur tariff costs of approximately USD 0.2 million per month. If the exclusion requests receive approval by the Department of Commerce, the Company expects to recover costs paid from the date of the initial 2018 filing of each request.

Mr Hockema said that “Our second half 2018 results were a record for the last six months of a year. Aerospace supply chain destocking began to moderate, and underlying commercial airframe demand was strong as build rates continued to grow. In addition, we realized the full impact of proactive price increases implemented during the second quarter of 2018. We have initiated additional price increases in 2019 for certain non-contract general engineering and aerospace applications and, with growing demand and improving prices, we have positive momentum as we begin 2019.”

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Posted By : Rabi Wangkhem on Wed, 27 Feb 2019
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