Aleris reports loss for 2019

Aleris reports loss for 2019

Losses in fourth quarter put Ohio-based aluminum producer in the red for the full year.

March 18, 2020

Cleveland-based Aleris Corp. has reported a $28 million loss for the fourth quarter of 2019, knocking the secondary aluminum producer and aluminum rolling firm into the red for the year, with a $12 million net loss.

Despite the net loss figures, the company also is claiming an “adjusted EBITDA [earnings before interest, tax, depreciation and amortization] of $388 million in 2019,” which it compared favorably to the $276 million earned in 2018. The company cites its debt service obligations and “a $31 million unfavorable change in unrealized derivative gains and losses” as factors in its net loss.

“In 2019 we saw the first full year of the earnings growth expected from our long-term strategy of investing in aerospace and automotive capabilities across the globe, as we delivered another record quarter [that] contributed to a 40 percent increase in adjusted EBITDA on a full-year basis,” says Sean Stack, the company’s chair and CEO.

While the company’s North America income grew in the fourth quarter of 2019 compared to the year before, it fell in Europe by $6 million. Aleris’ net 2019 fourth quarter income also rose in its Asia-Pacific operations.

Looking ahead to 2020, Stack comments, “In addition to dealing with heightened market uncertainties associated with the coronavirus, we already anticipated some softening in demand in 2020 in the aerospace and automotive end uses and additional pressure from common alloy foreign imports in North America.”

For 2020 Aleris also says it expects “lower global automotive volumes based on continued demand softness in Europe.”

Overhanging Aleris’ 2019 results and its future is its proposed acquisition by Atlanta-based Novelis Inc., which is part of India-based Hindalco Industries Limited.

Notes the company, “On July 26, 2018, we announced that we entered into a definitive agreement to be acquired by Novelis [for] approximately $2.6 billion, including the assumption of the company's outstanding indebtedness.”

As of March 2020, reports the firm, “The merger is subject to customary regulatory approvals and closing conditions. There can be no assurance that the merger will be consummated.” Aleris says additional detail on the proposed merger can be found in the Form 8-K filed back in July 2018.