Aluminum company Constellium SE, headquartered in Paris, has reported results for the third quarter ended Sept. 30 that include a 12 percent year-over-year increase in shipments and a 35 percent increase in revenue. For the nine months ended Sept. 30, the company also reported a 12 percent increase in shipments and a 22 percent increase in revenue.
In the third quarter, Constellium says it shipped 395,000 metric tons, 12 percent more than it shipped in Q3 of 2020. Quarterly revenue totaled 1.6 billion euros, or $1.86 billion, which was 35 percent more than in the comparable quarter last year. Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled 143 million euros, or $1.66 million, a 14 percent increase compared with Q3 of 2020.
For the first nine months of the year, Constellium says its shipments totaled 1.2 million metric tons, up 12 percent year over year. Revenue for the period totaled 4.4 billion euros, or $5.11 billion, a 22 percent increase compared with the same period in 2020. Adjusted EBITDA totaled 434 million euros, or $ 504.2 million, which is 23 percent more than in the first nine months of 2020.
“Demand remained strong across our packaging and industrial end markets, while automotive demand continued to be hindered by the semiconductor shortage and aerospace demand remained subdued as expected,” says Jean-Marc Germain, Constellium chief executive officer. “P&ARP (Packaging & Automotive Rolled Products) matched the record adjusted EBITDA of the second quarter supported by strong operational performance. A&T (Aerospace & Transportation) benefited from robust TID (transportation, industry and defense ) shipments and continued to demonstrate good cost control. AS&I (Automotive Structures & Industry ) also performed well with strong Industry shipments and solid cost control, which mitigated much of the weakness in automotive demand. Importantly, we continued to generate free cash flow and further reduced our leverage in the third quarter."
He added, "We expect recent demand trends in our markets to continue through the remainder of 2021.”
Germain projected that adjusted EBITDA would range from 550 million euros to 560 million euros for the year, or $639 million to $650.6 million.
The company also mentioned that it was investigating an increase in total planned European recycling center capacity to approximately 130,000 metric tons, up from slightly more than 60,000 metric tons. In the presentation that accompanied the quarterly earnings call, the company notes that the investment willtake place over three years.
Its strategic rationale for the investment is that it would provide greater slab supply security, including reducing Constellium’s reliance on virgin alloying materials; substantially reduce its Scope 3 emissions footprint; meet customer requests for higher recycled content and low carbon dioxide-footprint product; and satisfy the need for more recycling capacity in Europe as aluminum consumption grows, especially in can sheet and automotive sheet.
According to a transcript of the earnings call prepared by Motley Fool, Germain said, “By using recycled inputs purchased at a discount to primary aluminum and casting our own slabs, we will increase our security of supply and reduce our reliance on virgin metals, including aluminum and other alloys. We will also be able to meet customer requests for higher recycled content and low CO2 footprint products. At Constellium, we are increasingly aware of our environmental footprint and the same can be said for our customers and all the way to the end customer—consumers. Therefore, we expect our customers to be increasingly selective about the CO2 footprint of the metal they choose to use. We believe our ability to offer these products will be a competitive advantage as this environmental focus is likely to continue to intensify over time.”
Constellium attributed its higher quarterly and yearly revenue for the first nine months to higher metal prices and higher shipments, which it says were partially offset by a weaker mix.
Adjusted EBITDA for the first nine months of the year were attributed to stronger results in Constellium’s Packaging & Automotive Rolled Products and Automotive Structures & Industry segments, partially offset by weaker results in its Aerospace & Transportation segment.
Constellium’s quarterly net income of 99 million euros, or $115 million, compares with a net income of 20 million euros, or $23.2 million in the third quarter of the prior year, while its net income for the year through September was 255 million euros, or $296.3 million, compared with a loss of 43 million euros, or nearly $50 million. The change in net income is primarily related to higher gross profit and a favorable change in gains and losses on derivatives related to its metal hedging positions, partially offset by a change in income tax expense, according to the company.