Kaiser Aluminum expects its commercial aerospace-focused value-added aluminum product sales to be 20%-25% lower in 2020, compared with 2019 sales, as aerospace customers have temporarily curtailed operations due to the coronavirus pandemic, the company said Monday.
"Since late February 2020, global air travel has slowed dramatically as a result of the COVID-19 pandemic and large commercial airframe companies and their customers, the airlines, have been significantly impacted," Kaiser said in an earnings statement Monday. "The two largest airframe manufacturers have reduced their build rates and recently curtailed operations on a temporary basis. As a preferred strategic supplier, the company is working in partnership with its customers to meet their current needs while also preparing for production levels to ramp up."
Kaiser's aluminum product shipments in the first quarter slipped 4% year on year to 156 million lb. The company's overall value-added product revenue for Q1 decreased to $217 million from $218 million in Q1 2019.
Commercial aerospace production represents about 33% of Kaiser's consolidated value-added revenue under normal market conditions, the company said. However, the semi-fabricated specialty aluminum producer did not provide specific shipment or revenue numbers for its individual segments, which also includes products for the automotive, defense, machinery and general engineering sectors.
Kaiser said it continues to maintain a solid backlog for commercial aircraft and expects air travel to recover with subsequent growth in aircraft builds once the current market conditions ease.
"We do not know how long the pandemic will last, what implications it will have on our business or what type of economic recovery we will experience as we look forward," Kaiser CEO Jack Hockema said in a statement. "However, we do know that for more than a decade, our business cycle strategy has served us well through a wide range of economic cycles, including the recession in 2009, and has prepared us to address the challenges and potential opportunities presented by the COVID-19 pandemic."
Kaiser said all of its facilities remain operational, in compliance with government health guidelines and protocols, as part of the US' critical manufacturing sector. Still, it said it was suspending its full-year production outlook across all segments until the effects of the pandemic on the market became clearer.
The California-based company posted a profit of $29 million on $369 million in sales in Q1, compared with $28 million on $395 million in sales for the prior-year period.
Source: Platts |
