Oct. 25—Kaiser Aluminum’s stock tumbled 25% after reporting disappointing Q3 earnings Wednesday afternoon, below Wall Street expectations. The company expects future business performance to be in line with the lower end of its expectations.
The company reported Q3 revenues of $1.2 billion and profits of $31 million. Adjusted earnings per share, a measure widely used by investors to measure the profitability of a company, missed Wall Street expectations by a large margin, coming in at $1.89, 42 cents below expectations. On Thursday, the company lost about $600 million in stock market value, falling to about $1.9 billion.
The company had high expectations coming into earnings, given its record results in the previous quarter. Kaiser has benefited from the demand for aluminum rising over the past year.
The Trentwood rolling mill is the company’s main aerospace mill and one of the largest manufacturing employers in Spokane Valley at roughly 1,000 workers, contributing to an 11% rise in the company’s shipments over the quarter. Trentwood makes aluminum plate and sheet for the aerospace industry, an important product for the company.
It would have been difficult for Kaiser to beat the second quarter, given it benefited from “favorable metal price lag,” which is a timing gain that comes from aluminum prices rising. Last quarter, Kaiser was fortunate with how aluminum prices moved, which was unlikely to happen again. Chairperson, President and CEO Keith A. Harvey said the company was hurt by an unfavorable move in metal prices during the third quarter that contributed to a $29 million swing in earnings, which weighed on results.
“We probably blew everyone’s expectations away in the first half, and nobody believed us for the second half,” Harvey said in a statement.
The swing in aluminum prices also affected other aluminum companies. Alcoa Corp., Constellium SE and Century Aluminum Co. fell around 6% each Thursday morning.
Kaiser faced other headwinds. The company struggled with a packaging slowdown, which led to the company expecting lower shipment orders in the future.
Advertisement
“We have received requests to manage shipments as customers modify their year-end inventory levels and metal prices move lower from recent historic highs. As a result, we are modestly revising our shipment outlook to growth of 5%-10% from our prior expectation of 10%-15%,” Harvey said during the call.
While Harvey said Kaiser is “seeing no slowdown in long-term demand,” the company also reported some operational mishaps during the quarter, including a major plant outage at the Bellwood facility in Virginia.
