Century Aluminum posts a 2Q15 loss
Previously in this series, we’ve noted that Century Aluminum’s (CENX) 2Q15 shipments fell compared to the previous quarter due to labor disruptions and certain accounting adjustments. The labor disruption at its Hawesville plant also negatively affected its earnings by $11.7 million in 2Q15. Along with charges relating to labor disruption, Century Aluminum recorded several other restructuring-related charges in the quarter. We’ll discuss these in this part of our series.
Century Aluminum incurred an impairment charge of $30.9 million in 2Q15 relating to the permanent closure of its smelter in Ravenswood. You can see this charge in the chart above. The plant was idled six years ago in response to the global financial crisis. Century Aluminum was working towards a power supply agreement at this plant in a bid to restart the smelter. However, it has now given up its plans to restart this plant as aluminum industry fundamentals continue to worsen.
Century Aluminum should now be working to dispose of this plant. It will be interesting to see if it’s able to find a suitable buyer for the plant, as most aluminum producers—including Alcoa (AA) and Rio Tinto (RIO)—are shelving their high-cost smelting capacities.
Century Aluminum took a hit of $25.7 million in 2Q15 on account of inventory write-downs. The all-in aluminum price fell steeply towards the end of 2Q15. Century Aluminum has written down the carrying value of its inventory to reflect its true value.
The company recorded a contingent gain of $10.3 million relating to its Mt. Holly acquisition. We’ll discuss this in the next part of this series.