IMCO Recycling Inc. reported first quarter 2004 net earnings of $2.7 million, doubling net earnings of $1.3 million in the first quarter of 2003.
Richard Kerr, president and CEO, said that all three of the company's business segments contributed to the rise in first quarter profitability. The largest improvement was recorded by the international aluminum segment and resulted from the recent expansion of IMCO's foreign operations and the consolidation for the full period of the financial results of VAW-IMCO of Germany.
In addition, income of the zinc segment increased significantly because of a rise in the zinc price that resulted from the industry's better supply/demand balance. Income of the domestic aluminum segment also moved higher due to stronger business conditions.
First quarter 2004 processing volume of the international aluminum segment rose 110 percent and its income, which included an unrealized hedge gain of $1.9 million, increased to $7.0 million from $2.9 million in the same period last year.
The zinc segment's first quarter processing volume about equaled that of the year-ago period but its income rose to $3.9 million from $1.1 million because of the increase in the zinc price.
The domestic aluminum segment's first quarter processing volume rose six percent from that of the same period of 2003 and its income increased by 14 percent to $6.6 million from $5.8 million in the same period last year.
Kerr said that VAW-IMCO, which is a major supplier of specialty alloys to the European auto industry, "experienced strong demand for its products and services in the first quarter and also benefited from an expansion of its capacity that was completed last year. In addition, first quarter processing volume was sharply higher at our Monterrey, Mexico facility in which we acquired full ownership during the fourth quarter of 2003.
"The operating rates of our domestic aluminum recycling plants are beginning to increase because of the recovery in U.S. industrial activity and a stronger overall aluminum market," he said. "IMCO's specialty alloys facilities which provide those materials to vehicle manufacturers and their component suppliers raised their volume in this year's first quarter, but the high cost and scarcity of scrap reduced margins in this business."
Looking forward, Kerr said he was encouraged by recently published reports that signaled a continuation of relatively strong economic growth in the near term. "If we see greater strength in U.S. industrial activity, we should be able to further raise plant operating rates and also take advantage of the gains in productivity that we've put in place. In addition, specialty alloys volume will rise later in the year as higher shipments begin under the terms of our expanded contract with General Motors that was announced during the first quarter.
Total aluminum and zinc processing volume in the first quarter of 2004 was 829.9 million pounds, 25 percent above the 663.2 million pounds processed in the first quarter of 2003.