Century Aluminium continues with primary aluminium downturn in Third Quarter 2016

As a continuation of the downturn of US primary industry, Century Aluminium Company reported a net loss of $58.3 million ($0.67 per share) in Q3 against $9.5 million ($0.11 per share) in Q2. The adjusted net loss of third quarter was $29.1 million.  Results were negatively impacted by factors like the closure of the Ravenswood facility and market inventory adjustment.

On a YOY comparison, Century reported a net loss of $56.1 million partially caused by factors like permanent closure of our Ravenswood smelter, market inventory adjustments, labour disruption, curtailment in Hawesville smelter and other cost cutting measures. Results were however partially offset by a $0.8 million purchase accounting gain ($0.01 per share) related to Mt. Holly.

Sales for Q3 2016 were $326.8 million in comparison to $454.5 million in Q3 2015. Shipments of primary aluminium were 182,429 tonnes compared with 231,040 tonnes in Q3 2015. The capacity closure during the second half of 2015 is responsible for the drop in sales and shipment volume.

For first three quarters of 2016, Century reported a net loss of $84.0 million. Results included a negative impact of $26.8 million for smelter closure, lower of cost or market inventory adjustments. For H1 2015, Century reported a net income of $39.9 million.

Sales for first three quarters of 2016 were $979.3 million compared with $1,565.9 million in first three quarters of 2015. Shipments of primary aluminium for first three quarters were 550,615 tonnes compared with 710,248 tonnes in the same period of 2015. The decrease in sales and shipment volume was directly attributable to capacity closure in the second half of 2015.

Commenting on the results, Michael Bless, President and Chief Executive Officer of Century aluminium said, "A cross current of factors is influencing our markets…The commodity price has firmed and regional delivery premiums are somewhat stronger. Demand remains generally good and supply, excluding in China, continues to be constrained. On the other hand, value-added product premiums, especially in the U.S., are under pressure due to the significant and growing level of imports caused by the excess production in China."

"Third quarter financial performance was negatively influenced by elevated power prices in the U.S. Midwest, a result of the historically hot summer weather; delivered prices have now generally reverted to pre-summer levels," Mr. Bless continued. "In addition, rising alumina prices pressured quarterly results. We believe this trend is largely a reaction to the startup of new capacity in China, and we expect it to temper over the coming months. Internally, our operations are performing well and our cost structure, flexibility and product configuration continue to provide protection against weaker pricing environments as well as exposure when the market firms."

"Overcapacity and overproduction continue to subsist in great quantities in China, negatively impacting rational producers and markets in the rest of the world," concluded Mr. Bless.

He pointed towards subsidized Chinese production, aluminium overcapacity and distortion in the global market and applauded all the members of aluminium congress who, have called on the administration to take immediate action to enforce global trade law and protect this sector and those that depend on it.

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