Century Aluminum Reports Second Quarter 2011 Earnings
MONTEREY, CA. August 4, 2011 -- Century Aluminum Company (NASDAQ: CENX) today reported net income of $24.0 million ($0.24 per basic and diluted share) for the second quarter of 2011. Financial results were negatively impacted by a $7.7 million charge related to the contractual impact of the recent changes in the Company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable, reflecting the fact that the matter is now in litigation, despite the Company's continuing view that it will ultimately receive such proceeds; a loss on forward contracts of $1.6 million, primarily related to the marking to market of aluminum put options; and a charge of $0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased quarterly results by $8.9 million with an associated discrete tax benefit of $2.1 million.
In the second quarter of 2010, the company reported net earnings of $5.1 million ($0.05 per basic and diluted share). Results were positively impacted by a gain on forward contracts of $9.3 million primarily related to the marking to market of aluminum put options. Cost of sales for the prior year quarter included a $16.0 million charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements and a $7.0 million charge for lower of cost or market inventory adjustments.
Sales in the second quarter of 2011 were $366.3 million, compared with $287.9 million in the second quarter of 2010. Shipments of primary aluminum for the quarter totaled 151,483 tonnes compared with 144,580 tonnes in the year-ago quarter.
For the first half of 2011, the company reported net income of $49.0 million ($0.48 per basic and diluted share). First half results were negatively impacted by a $7.7 million charge related to the contractual impact of the recent changes in the Company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable; a loss on forward contracts of $6.4 million, primarily related to the marking to market of aluminum put options; and a charge of $0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased first half results by $18.3 million with an associated discrete tax benefit of $4.2 million. Cost of sales for the first half includes an $8.6 million charge related to the restart of a curtailed potline at the Hawesville, KY smelter. This result compares to net income of $11.5 million ($0.11 per basic and diluted share) for the first half of 2010. Results for the prior six-month period were positively impacted by a gain on forward contracts of $7.3 million, primarily related to the marking to market of aluminum put options. Cost of sales for the first six months of 2010 included a $31.5 million charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements and a $6.9 million charge for lower of cost or market inventory adjustments.
Sales in the first six months of 2011 were $692.6 million compared with $573.2 million in the same period of 2010. Shipments of primary aluminum for the first six months of 2011 were 295,661 tonnes compared with 289,257 tonnes for the comparable 2010 period.
"Aluminum market conditions have remained generally stable during the last few months," commented Logan W. Kruger, Century's President and Chief Executive Officer. "In the developed economies, we continue to see demand reasonably in balance with supply. In China, Brazil and other developing markets, the pace of growth continues at robust levels. The long-term trends of constrained supply and escalating costs continue to be reinforced. More broadly, the well-published macro-economic issues, in both developed and developing markets, constitute risks that are difficult to quantify. Short of any of these concerns manifesting themselves in the form of real crises, we remain constructive on the aluminum market over the medium term.”
Mr. Kruger continued, "We are focused on returning Hawesville to the trajectory we anticipated earlier this year. The issues facing the plant can all be remedied with qualified and determined leadership. Over the last thirty days, we have brought on board an able and experienced plant manager and have filled almost all of the previously vacant key operating and technical positions. The team has stabilized the operations and has now turned the corner toward reinstituting the plan to achieve full operating capacity for five lines, which we believe we will reach by the end of the year.
"We have made good progress across the rest of the company," concluded Mr. Kruger. "Grundartangi had an excellent quarter, with annualized shipment volume of 278,000 metric tons and controllable costs in check. Mt. Holly's performance was also very good; the plant is performing near its historically best-in-class levels. Lastly, we advanced the discussions with Helguvik's power suppliers in Iceland, as we continue to move toward a restart of major construction activity."
Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Monterey, California.
Century Aluminum’s quarterly conference call is scheduled for 5:00 p.m. Eastern time today. To listen to the conference call and to view related presentation materials, go to www.centuryaluminum.com and click on the conference call link on the homepage.
Contacts:
| Mike Dildine (media) | | 831-642-9364 |
| Shelly Harrison (investors) | | 831-642-9357 |
Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:
Atli B. Gudmundsson, Senior Manager -- Corporate Finance, NBI hf.
Steingrimur Helgason, Director -- Corporate Finance, NBI hf.
Cautionary Statement
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements, including, without limitation, declines in aluminum prices or increases in our operating costs; deterioration of global financial and economic conditions; increases in global aluminum inventories and the addition of additional global aluminum production capacity; additional delays in the completion of our Helguvik, Iceland smelter; and our ability to successfully implement measures to return our Hawesville facility to full production. Forward-looking statements in this press release include statements regarding future market conditions, including the pace of future macro-economic growth and the continuance of supply and cost trends in the aluminum market, our ability to successfully remedy production issues at our Hawesville facility; the ultimate outcome of certain insurance litigation; and our ability to successfully restart construction activity at our Helguvik facility. More information about the risks, uncertainties and assumptions affecting the Company can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K and in other filings made with the Securities and Exchange Commission. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances.
