IMCO Recycling Inc. reported fourth quarter net earnings of $456,000. These results include a gain of $5.4 million after tax from the early extinguishments of debt that was partially offset by charges totaling $3.8 million after tax for the write-off of the company's Utah aluminum recycling facility which was permanently closed, and for write-downs of certain other properties held for sale.
IMCO's net earnings for the full year totaled $3.9 million.
The major factors affecting IMCO's financial results in the fourth quarter of 2003 include the following:
The company's aluminum-domestic segment incurred a loss of $2.4 million compared with income of $8.1 million in 2002's fourth quarter. The loss resulted from the write-off of the Utah plant, from a write-down of property held for sale, and from a seven percent decrease in the combined amount of material processed at U.S. aluminum recycling and specialty alloys plants.
IMCO's aluminum recycling volume has been depressed for about three years, mainly because of the low level of U.S. industrial activity that prevailed during this period.
It also has been affected by a decrease in the collection and recycling of aluminum beverage cans, and by closures of customers' plants in the Pacific Northwest. Volume of the company's specialty alloys facilities serving the auto industry was strong in the fourth quarter of 2003 but these plants' profit margins were reduced by the scarcity and high cost of scrap.
Fourth quarter processing volume of the aluminum-international segment was significantly above the level of the same period of 2002. The segment's income was $5.7 million compared with income of $845,000 in the fourth quarter of the prior year.
Income of IMCO's zinc segment was $834,000 compared with income of $394,000 in 2002's fourth quarter. This improvement was primarily due to a rise in the zinc price that resulted from the industry's better supply/demand balance.
Don Ingram, chairman and CEO, said the company's total aluminum volume "increased in the fourth quarter from the levels of 2003's third quarter as U.S. and world economic conditions improved. Aluminum and zinc commodity prices also moved higher, indicating a strengthening of these markets. We believe these trends will continue in 2004 and that we also will benefit this year from the expansion of our European and Latin American operations. We expect all these positive factors to more than offset our higher interest costs and allow us to increase IMCO's net earnings in the first quarter of 2004 from the $1.3 million that we earned in the same period last year."
In the fourth quarter and full year of 2003, the company's processing volume, revenues and cost of sales all increased from year-ago levels because of the consolidation of VAW-IMCO's operations, greater production at IMCO's Brazilian facility and expansions of capacity at both VAW-IMCO and the company's Mexican plant. Revenues rose more than volume because the majority of VAW-IMCO's volume is based on product sales that include the cost of metal purchased, processed and sold.
Total aluminum and zinc processing volume in the fourth quarter of 2003 was 783.1 million pounds, 20 percent above the 653.4 million pounds processed in the fourth quarter of 2002.
Revenues in the fourth quarter totaled $237.9 million, 42 percent higher than revenues of $167.9 million in the same period of 2002.
Processing volume for the full year was 2.96 billion pounds, 17 percent above the 2.54 billion pounds processed in 2002.
Revenues in 2003 totaled $892.0 million, 30 percent higher than revenues of $687.2 million in 2002.