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Constellium’s Shipments Rose, But Its Profits Decreased in 4Q14

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Constellium’s shipments rose

Previously, we discussed Constellium’s (CSTM) major operations. Now, we’ll analyze the key aspects of its fourth quarter financial results. Constellium’s shipments increased by 6% compared to 4Q13. Century Aluminum (CENX) also reported higher shipments in the fourth quarter. Last year, it acquired the full stake in the Mt. Holly smelter from Alcoa (AA). Currently, Alcoa forms 3.5% of the SPDR S&P Metals and Mining ETF (XME).

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Profits down

While Constellium’s shipments increased in the fourth quarter, its profits decreased. The above chart shows the summary of Constellium’s financials. As you can see, its fourth quarter EBITDA (earnings before interest, tax, depreciation, and amortization) came down by 14% on a year-over-year, or YoY, basis.

In the fourth quarter, the EBITDA per ton came down by 18% on a YoY basis. One of the main reasons for Constellium’s lower profits was a massive increase in aluminum premiums last year.

Aluminum premiums

Constellium is an aluminum fabricator. Precision Castparts (PCP) is another leading fabricator of metal products. Constellium has to pay aluminum premiums to purchase primary aluminum metal. However, it hasn’t been able to pass on the premiums to some of its customers. This impacted its profitability for several quarters. Aluminum premiums increased sharply last year.

Aluminum premiums in Europe came down in 2015. This would be positive for Constellium. You can read more about the latest aluminum indicators in Alcoa investors – some key aluminum indicators you should track.

Another reason for Constellium’s lower fourth quarter profits has been the operational challenges in its Aerospace and Transportation segment. In the next part of this series, we’ll analyze how Constellium’s Aerospace and Transportation segment performed in the fourth quarter.

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