Century Aluminum Company announced net loss of USD 12.3 million for the Q2 of 2012. Financial results were positively impacted by an unrealized net gain on forward contracts of USD 1.8 million primarily related to the mark to market of aluminum price protection options. Cost of sales for the quarter included USD 5.4 million charge for lower of cost or market inventory adjustments.
For the Q2 of 2011, Century reported net income of USD 24.0 million. Financial results were negatively impacted by USD 7.7 million charge related to the contractual impact of certain changes in the company's Board of Directors and the executive management team a charge of USD 2.9 million related to an insurance receivable, reflecting the fact that the matter had entered litigation an unrealized net loss on forward contracts of USD 1.5 million, primarily related to the mark to market of aluminum price protection options and a charge of USD 0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased quarterly results by USD 8.9 million with an associated discrete tax benefit of USD 2.1 million.
Sales for the Q2 of 2012 were USD 323.6 million compared with USD 366.3 million for the Q2 of 2011. Shipments of primary aluminum for the 2012 Q2 were 160,828 tonnes compared with 151,483 tonnes shipped in the year ago quarter.
For the H1 of 2012, the company reported a net loss of USD 16.7 million. H1 results were negatively impacted by an unrealized net loss on forward contracts of USD 3.2 million primarily related to the mark to market of aluminum price protection options. Cost of sales for the first half included an USD 11.6 million benefit for lower of cost or market inventory adjustments.
This result compares to net income of USD 49.0 million for the H1 of 2011. Results for the prior 6 month period were negatively impacted by USD 7.7 million charge related to the contractual impact of the changes in the company's Board of Directors and the executive management team; a charge of USD 2.9 million related to an insurance receivable an unrealized net loss on forward contracts of USD 6.2 million, primarily related to the marking to market of aluminum price protection options and a charge of USD 0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased H1 results by USD 18.3 million with an associated discrete tax benefit of USD 4.2 million. Cost of sales for the first 6 months of 2011 included an USD 8.6 million charges related to the restart of a curtailed potline at the Hawesville, Ky smelter.
Sales in the first 6 months of 2012 were USD 649.8 million compared with USD 692.6 million in the same period of 2011. Shipments of primary aluminum for the first 6 months of 2012 were 320,795 tonnes compared with 295,661 tonnes for the comparable 2011 period.
Mr Michael Bless president and CEO Century Aluminum said that "We have witnessed a weakening of global economic conditions and sentiment during the past several months. The sovereign and banking crisis in the Eurozone, coupled with a deceleration of growth in China and other emerging economies has weighed on prices of commodities and similar assets. Though we have yet to see any meaningful deterioration in our US customer markets, we are closely watching the situation. Within this present weak environment, we continue to believe the fundamentals of the aluminum sector foreshadow more favorable conditions over the longer term."
Mr Bless said that "At Century we are planning for the longer term, while continuing to manage the business carefully during these uncertain times. Our acquisition of the carbon anode production facility in Vlissingen, the Netherlands is based upon an objective of long term security of quality supply of this strategic raw material; in addition, the investment carries a favorable financial return. That said we will carefully manage the capital improvement program and easily can defer this process should global conditions warrant. We had a strong quarter at our existing operations. Safety performance was generally very good across the company. Cost reduction activities continue to show tangible results cash operating costs have fallen meaningfully since the third quarter of 2011.”
He said that we are continuing in our aggressive efforts to secure electric power arrangements which will provide for the long term competitiveness of our US plants. This process has yielded good results at Mt. Holly and continues in earnest at Hawesville. We have maintained our determined efforts to restart our Ravenswood plant, and are now in detailed discussions with the Public Service Commission and other key constituencies regarding an enabling power contract. We believe restarting the plant will be an attractive investment for our shareholders.
Source - Century Aluminum
(www.steelguru.com)
