Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Kaiser Aluminum expects general engineering and automotive shipments to counterbalance its lost revenues.


The company extended the horizon on an existing contract with Boeing in August to supply sheet and light gauge aluminum plate for its commercial aircrafts. However, the Boeing 737 MAX’s involvement in two fatal accidents resulted  suspended production, leaving the Kaiser-Boeing pact hanging in the balance. 


Nevertheless, the aluminum maker expects low-single-digit increases in total shipments and revenue in 2020, as well as a full-year EBITDA margin north of 26pc. The company reported Its aerospace business segment has lucrative contracts with the defense industry, and while automotive build rates in North America won’t diverge much from 2019, the company expects double-digit auto shipment growth as new programs come online. 


It expects semi-conductor demand to remain robust in 2020 and drive demand for the company’s products, although Kaiser’s non-core applications will substantially decline. Additionally, the firm is launching a $375mn expansion and operational security investment at its Trentwood facility. The expansion will help the company absorb strong demand from commercial aerospace applications and heat treat plate—for which production capacity will increase by 25pc when the facility’s upgrades are complete in 2025—product demand in the coming years.


Kaiser’s shipments in 2019 totaled 625mn lb (283,495mt), which decreased from 652mn lb in 2018. In Q4 2019, the company shipped 153mn lb, down from 159mn lb during Q4 2018.


The firm’s net sales in 2019 amounted to $1.514mn, down from $1.586bn during the prior year. Its Q4 2019 net sales of $369mn decreased by $20mn from $389mn during the fourth quarter of 2018.


Kaiser had an operating income of $164mn in 2019, $3mn more than its $161mn 2018 operating income. During Q4 2019, it had a $40mn operating income—substantially lower than the $37mn it had during the prior year period. 


The company had a $126mn net loss in 2019, slightly lower than a loss of $144mn during the previous year. It reported an $11mn net loss during the fourth quarter, after a $24mn gain during the same quarter in 2018.

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