IMCO Sees Profits for Quarter

IMCO Recycling Inc. reported second quarter net earnings of $2.5 million, equaling net earnings of $2.5 million in the same period last year.

Don Ingram, chairman and CEO, said: "In the second quarter, our full ownership of VAW-IMCO of Germany, formerly a joint venture, and the recent expansion of our Mexican plant increased the processing volume and profitability of our international segment. These improvements offset a decline in results from the company's domestic aluminum segment."

VAW-IMCO operates two aluminum recycling and foundry alloy facilities and is a leading supplier to the European auto industry and the containers and packaging and building and construction markets.

Ingram said technological improvements are lowering the company's use of natural gas per pound processed but that increases in the cost of this fuel compared with the year-ago period negatively affected second quarter profitability. "In addition," he said, "the high cost and scarcity of scrap in the second quarter was the major cause of a decline in the performance of our specialty alloys plants that supply the North American auto industry.

“Processing volume at our domestic aluminum recycling facilities remained weak in the period because of the continued low level of U.S. manufacturing activity. Volume at these plants is also being affected by decreased demand from can stock producers, the lower aluminum beverage can recycling rate and the continued shutdown of primary aluminum smelters in the Pacific Northwest. All of these factors contributed to a 48 percent decline in the second quarter income of our domestic aluminum segment.

"We are aggressively pursuing additional long-term supply agreements that could raise our aluminum recycling volume later this year and in 2004," Ingram said. "Also, the expected strengthening of U.S. industrial activity will help improve the performance of this segment. In the meantime, we will continue to emphasize cost reductions and productivity improvements in our manufacturing plants."

The second quarter profitability of the company's zinc segment improved from the year-ago level due to a rise in processing volume and a slight increase in the zinc price.

Looking forward, Ingram said he does not expect improvement in domestic aluminum recycling volume in the third quarter, and that the company's specialty alloys plants and VAW-IMCO will be affected in the period by the traditional shutdown of auto manufacturing facilities for model changeovers. "As a result of these facts and general economic uncertainties, we now expect our third quarter 2003 earnings to fall between the range of this year's first and second quarters."

The company reported total second quarter processing volume was 768.2 million pounds, 24 percent above volume of 620.0 million pounds in the same period last year. Processing volume in the first six months of 2003 increased 16 percent to 1.43 billion pounds from 1.23 billion pounds in the same period last year.