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This is up more than 80% on PR earnings today.
FOOTHILL RANCH, Calif., May 11, 2006 (BUSINESS WIRE) -- Kaiser Aluminum today reported net income of $38.4 million for the quarter ended March 31, 2006, compared to $8.3 million for the same period in 2005, driven by strong broad based demand for fabricated aluminum products, particularly in the aerospace and high strength products. Net sales for the first quarter reached $336.3 million, up 20 percent from the same period in 2005 when the company reported net sales of $281.4 million. The improvement is attributed to an 11 percent increase in average realized prices, primarily reflecting higher underlying aluminum prices, and a 7 percent increase in shipments.
Operating income in the fabricated products division reached $45.0 million for the first quarter of 2006, compared to $25.4 million for the first quarter of 2005. Approximately $7 million of the improvement was driven by the higher sales volume led by the aerospace sector, where shipments improved by 28 percent as compared to the first quarter of 2005. The increase also reflects improved cost performance as a result of ongoing efficiency efforts. The strong cost performance offset approximately $4 million of higher natural gas and energy prices in the first quarter of 2006 as compared to 2005. First quarter 2006 results also benefited from lower than normal major maintenance spending, improved scrap metal utilization and scrap spreads, and approximately $9 million of "metal profits" related to the rising price of primary aluminum.
Third-party net sales of primary aluminum in the first quarter of 2006 increased 31 percent over the first quarter of 2005 primarily as a result of a 26 percent increase in third-party realized prices and a 2 percent increase in shipments. However, earnings from the primary aluminum segment in 2006 only increased to $8.7 million, as compared to $2.8 million for the same period in 2005 as previously installed price risk-management activities had the effect of capping the benefit of the primary aluminum price increase. First quarter 2006 results also include unrealized mark-to-market gains of approximately $4 million on hedging instruments while first quarter 2005 results included mark-to-market losses of approximately $2 million.
"Favorable market conditions are broad based and look to be sustainable in the near term. At the same time our first quarter operating income reflects more than $15 million of reported income from non-run-rate benefits such as metal profits, mark-to-market gains, and lower major maintenance costs," said Jack A. Hockema, president and CEO of Kaiser Aluminum.
"Even discounting the non-run-rate benefits, the results for the first quarter were very strong. While our markets are cyclical, we look forward to cushioning any negative impact of future downturns with new plate capacity projects and underlying new business such as the previously announced Airbus and Boeing sales agreements," added Hockema.
The company's second amended plan of reorganization (POR) was accepted by all classes of creditors entitled to vote on it and, on February 8, 2006, the POR was confirmed by the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The confirmation order remains subject to motions for review and appeals filed by certain insurers and must still be adopted or affirmed by the United States District Court (the "District Court"). Other significant conditions to emergence include completion of the company's exit financing, listing of the new common stock on the NASDAQ stock market and formation of certain trusts for the benefit of different groups of tort claimants. As provided in the POR, once the Bankruptcy Court's confirmation order is adopted or affirmed by the District Court, even if the affirmation order is appealed, the company can proceed to emerge if the District Court does not stay its order adopting or affirming the confirmation order and the key constituents in the Chapter 11 proceedings agree. Assuming the court adopts or affirms the confirmation order, the company believes that it is possible that it will emerge during the second quarter of 2006 or early in the third quarter of 2006. No assurances can be given that the Bankruptcy Court's confirmation order will ultimately be adopted or affirmed by the District Court
Kaiser Aluminum Corporation (OTCBB: KLUCQ) is a leading producer of fabricated aluminum products for aerospace and high-strength, general engineering, automotive, and custom industrial applications.
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