IMCO Recycling Inc. reported that its total processing volume and overall segment income increased significantly in the third quarter of 2004, but that a customer bankruptcy filing caused it to report a net loss for the period of $314,000.
In the third quarter of 2003 the company had a net loss of $693,000 due mainly to a low level of processing volume in the domestic aluminum segment, and to the recording of a mark-to-market aluminum hedge loss in the international aluminum segment.
As previously announced, INTERMET Corporation's bankruptcy filing on September 30 prevented IMCO from recognizing $3.2 million of revenues for third quarter 2004 shipments of specification aluminum alloys to that customer. The costs associated with those shipments were recorded in the third quarter. The company is aggressively pursuing recovery of the value of the INTERMET shipments through the bankruptcy process. If funds are recovered, they would be reported as income in future periods when received.
Richard Kerr, IMCO's president and CEO, said, "Our total processing volume in 2004's third quarter was 16 percent higher than in the same period a year ago. Even with the effect of the customer bankruptcy filing, overall segment income of our domestic aluminum, international aluminum and zinc businesses was 50 percent higher than in last year's third quarter."
Third quarter 2004 volume of the domestic aluminum segment rose 15 percent from the level of the year-ago period because of the recovery in U.S. industrial activity, a stronger overall aluminum market and new business the company has obtained. Income of this segment, which was affected by the customer bankruptcy filing, totaled $4.1 million compared with $4.0 million in the third quarter of 2003.
Increased customer demand and higher operating rates at IMCO's international aluminum facilities in Brazil, Mexico and Europe resulted in a 24 percent rise in that segment's third quarter 2004 processing volume. The company's consolidated subsidiary, VAW-IMCO GmbH of Germany, met the increased demand from its customers with greater capacity that was added in a project completed last year. Income of the international aluminum segment more than doubled to $5.4 million from $2.4 million in the comparable 2003 period due to the rise in volume and to the mark-to-market hedge loss recorded in the year- ago period.
The zinc segment's third quarter processing volume was slightly higher than in the same period of 2003 but its income increased to $2.4 million from $1.6 million because of a rise in the zinc price which resulted from that industry's better supply/demand balance.
Total aluminum and zinc volume in 2004's third quarter was 863.0 million pounds, 16 percent above volume of 741.5 million pounds in the same period of 2003.
Revenues in the third quarter were $283.0 million, up 29 percent from revenues of $219.6 million in the same period of 2003. Revenues rose more than volume because of higher metal prices and because the majority of VAW- IMCO's volume is based on product sales that include the cost of metal purchased, processed and sold.
Processing volume in the first three quarters of 2004 increased 17 percent to 2.53 billion pounds from 2.17 billion pounds in the same period of 2003.
Revenues in the first three quarters of this year rose 31 percent to $854.0 million from revenues of $654.1 million in the first nine months of 2003.