How the automotive segment helped Constellium’s P&ARP

In the previous part, we discussed the weakness in Constellium’s (CSTM) Aerospace & Transportation segment. Let’s now learn more about Constellium’s Packaging and Automotive Rolled Products (or P&ARP) segment. This segment supplies sheet products to beverage and automotive companies. While the growth in the packaging industry has been modest, demand from automotive companies has been strong.

Constellium (CSTM) has announced the acquisition of Wise Metals, which will help it serve automobile companies in North America. We will discuss more about this acquisition later. Alcoa (AA), and Century Aluminum (CENX) are also ramping up their production capacities to cater to the increasing demand from automotive companies.

The previous chart shows the 3Q14 results of the P&ARP segment. As you can see, shipments increased by 4% over 3Q13. The growth in shipments is due to higher shipments of automotive sheets, which increased a whopping 82% over last year.

The adjusted earnings before interest, taxes, depreciation, and amortization (or EBITDA) also increased by 10% over 3Q13. Please be aware that in the third quarter, higher aluminum premiums negatively impacted this segment by 2 million Euros.

Metal service centers such as Reliance Steel & Aluminum (RS) have also increased their aluminum inventories, due in part to the higher demand from automotive companies. Currently, Reliance Steel is part of the Standard and Poors depositary receipt (or SPDR) S&P Metals and Mining exchange-traded fund (or ETF) (XME).

There is another segment of Constellium (CSTM) that supplies aluminum products to automotive companies. We will discuss it in our next part.