Constellium¡¯s aluminum profits take flight with aerospace sector

Previously in this series, we looked at the various reporting segments of Constellium’s business (see Part 2). Now let’s learn more about these segments. Let’s see how the segments have performed, and what strategies Constellium N.V. (CSTM) is taking to grow each business, beginning with aerospace.

Constellium aluminum in aircrafts                                                                              

This graphic shows the key components that Constellium supplies to the aerospace industry. Analysts estimate this segment will grow at a compound annual rate of more than 8% over next five years. Interestingly, even though the aluminum industry is plagued by massive inventories, there is a nine-year production backlog for the large commercial aircraft segment.

How Constellium is playing the aerospace market

Constellium is investing in its capacity to ramp up service to the aerospace industry. It recently launched a low-density alloy named AIRWARE. This product can reduce the weight of an aircraft by almost 25%, making it more fuel efficient. AIRWARE products have already been accepted by Airbus for its next generation twin jet aircraft, and by Bombardier for its single-aisle short-haul planes.

Constellium also announced a multiyear agreement with Boeing. Long-term contracts with buyers helps Constellium improve revenue visibility. All aluminum companies, including Alcoa Inc (AA), Century Aluminum Co  (CENX), and Kaiser Aluminum Corp. (KALU), strive for long-term agreements with their customers. Some of these companies are included in the SPDR S&P Metals and Mining ETF (XME).

Next, we’ll look at Constellium’s packaging segment.

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