IMCO Reports Loss for Quarter

IMCO Recycling Inc. reported a net loss of $342,000 for the third quarter. In the same period last year the company recorded net earnings of $2.5 million.

The company attributed the loss to a number of reasons. One of the largest reasons was the incorporation of the VAW-IMCO of Germany operations. This division reported third quarter income of $2.4 million, including an aluminum hedge loss of $1.3 million.

Third quarter 2003 income of the aluminum-international segment decreased by $3.9 million or 62 percent compared with that of the second quarter due to a decline in processing volume caused by seasonal shutdowns of customers’ manufacturing facilities and to the unrealized hedge loss.

The company also reported that the income of the company’s aluminum-domestic segment was $3.8 million, a decrease of 63 percent compared with 2002’s third quarter. The decline was due to a 16 percent decrease in processing volume at U.S. aluminum recycling and specialty alloys plants, to a reduction in profit margins that mainly resulted from the scarcity and high cost of scrap, and to greater natural gas costs.

Processing volume at IMCO’s aluminum recycling facilities has been depressed for nearly three years by the continued low level of U.S. industrial activity, a decrease in the beverage can recycling rate and other factors.

Income of the company’s zinc segment was $1.6 million, an increase of 87 percent compared with 2002’s third quarter.  This improvement occurred because processing volume at these facilities rose and the zinc price moved higher.

In the third quarter and first nine months of 2003, IMCO Recycling’s processing volume, revenues, cost of sales, selling, general and administrative expense and borrowing costs all increased from year ago-levels because of the consolidation of VAW-IMCO’s operations and greater production at the company’s Brazilian and Mexican facilities.

Total third quarter processing volume was 741.5 million pounds, 14 percent above volume of 651.0 million pounds in the same period last year.

Revenues rose 21 percent to $219.6 million from $180.9 million in the third quarter of 2002.

IMCO Recycling’s net earnings in the first nine months of 2003 totaled $3.4 million. In the same period of 2002, net earnings were $5.4 million before the cumulative effect of a required accounting change regarding valuation of goodwill that was adopted effective January 1, 2002. 

After the effect of the accounting change, the company recorded a net loss of $53.3 million for the first three quarters of 2002.

Processing volume in the first nine months of 2003 increased 15 percent to 2.17 billion pounds from 1.88 billion pounds in the same period last year.