US aluminum producer Noranda sees shipments rise, profits down in Q4

Noranda Aluminum Holding shipped 150.5 million lb of primary aluminum products in the fourth quarter, up from 145.1 million lb in the year-earlier period and 149 million lb in Q3 2013, the US producer said Wednesday.

Noranda's integrated net cash cost for primary aluminum products was 78 cents/lb shipped in Q4, down from 82 cents in Q4 2012 and 89 cents in Q3 2013.

Total Q4 segment profit was $20.8 million in the period, down from $30.9 million a year ago but up from $11 million in Q3 2013. Excluding special items, Noranda posted a net loss of $8.5 million, down from a loss of $20.3 million in Q3 2013 but up from a net loss of $7.8 million in Q4 2012.

Noranda said its Q4 results were affected by lower aluminum prices and lower shipment volumes in the flat-rolled products segment. Also affecting profits were higher natural gas prices and electricity costs, but Noranda said it offset a large portion of these negative drivers through productivity improvements, non-London Metal Exchange-linked pricing and lower prices for key commodity inputs.

"We saw solid fourth-quarter demand for our primary value-added products," President and CEO Layle "Kip" Smith said in a statement.

"Our fourth-quarter performance was a strong finish to 2013, which was a year of stable overall demand, focused cost control, and improved reliability and operating effectiveness," he said. "Through these efforts, in 2013 we offset all cost inflation and partially offset the effects of lower LME prices."

Sales for Q4 were $313.2 million, down from $332.9 million in the year-ago period and $339.9 million in Q3 2013, driven by lower shipments in the flat-rolled products segment.

"The combined effects of planned mill turnarounds and seasonal destocking by customers caused flat-rolled product shipments to decrease by 23% compared to third quarter," Noranda said, but added that the decrease was partially offset by higher external shipments of bauxite, alumina and primary aluminum.

For the alumina segment, the company reported $2.8 million in profit for Q4 2013, down from $5.8 million in the year-ago period and $3.9 million in Q3. The decrease was mainly due to lower LME-linked prices.

Noranda's realized price, inclusive of the Midwest premium, was $0.90/lb in the fourth quarter, down from $1.01/lb a year earlier.

The company's primary aluminum segment posted a Q4 profit of $14.9 million, compared with $24.8 million in Q4 2012 and a loss of $1.1 million in Q3 2013. Sequentially, the segment benefited from the relief from normal seasonal peak power rates in Q3, but saw year-on-year declines due to lower LME-linked prices and higher electricity costs.

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