London 05/05/2016 - Aleris' first-quarter profit dropped 18 percent from the same period of last year, which it attributed to unfavourable spreads that spoiled consistently higher sales volumes.
Profits slipped to $45 million in the first quarter of 2016 from $55 million in the same period last year. A weaker dollar and 'challenging' metal spreads led to an unfavourable impact of $19 million during the quarter, the aluminium roller and extruder said.
Forward spreads for aluminium, which is used in products from drinks cans to aeroplanes, were volatile but largely in backwardation in the first quarter, periodically forcing LME prices higher and also making it more expensive to hold metal and suppressing physical premiums.
And although Aleris benefitted from a lower LME price for aluminium ingots, this tightened the scrap market, hitting the company's margins by $10 million in the US, it said.
In total, Aleris shipped 205 tonnes of finished product in the first quarter of this year compared with 200 tonnes in 2015.
Globally, automotive and aerospace volumes rose 23 percent and 20 percent respectively compared with the first quarter of 2015.
"Strong demand in the global automotive and aerospace industries and positive trends in our regional businesses, especially in North America building and construction, helped to offset the impact of headwinds from metal spreads and currencies," president and CEO Sean Stack said.
(Editing by Mark Shaw)